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February 09, 2023 | Tom Ballard

Pentagon has new office focused on deep tech

The focus of this office is on accelerating the commercialization of technologies that support national security but also contribute to larger economic prosperity.

Two months after its launch, the Pentagon’s Office of Strategic Capital (OSC) is looking at ways to increase capital flows and market participation in deep technology areas — things like artificial intelligence, biotech and quantum computing — and is developing its first investment strategy.

That’s the word from OSC Director Jason Rathje as related in this article from Breaking Defense. “How do we give these technology entrepreneurs the opportunity to take their [science and technology] into products and services that not only support the national security mission but also larger economic prosperity? Well, the Office of Strategic Capital is investigating two new strategies to help align and scale private investment to support national security.”

Those two strategies are: (1) syndication, where the government partners with private capital providers to co-invest in new technology efforts to help scale the business as we help scale the technology; and (2) leverage, where the government lowers the cost of capital so that private investors are able to make patient capital investments in deep technology companies.

The Pentagon established OSC to help bridge the “valley of death,” where innovative technologies fail to shift into actual programs of record, by developing and implementing “proven partnered strategies to shape and scale investment in critical technologies,” DoD said in a memo.

In December OSC launched its first program activity, the Small Business Investment Company critical technologies initiative in partnership with the Small Business Administration.

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