The Department of Defense (DoD) said that it has established the new Office of Strategic Capital (OSC), which will aim to connect defense technology developers with sources of private capital to help companies bridge the crucial funding gap between and development and full-scale production.

The new office will work to connect companies with private capital to secure investments that will sustain defense-tech developers in fields including “advanced materials, next-generation biotechnology, and quantum science,” the Pentagon said.

“We are in a global competition for leadership in critical technologies, and the Office of Strategic Capital will help us win that competition and build enduring national security advantages,” said Defense Secretary Llloyd Austin.

“By working with the private capital markets and by partnering with our Federal colleagues, OSC will address investment gaps and add a new tool to the Department’s investment toolbox,” he said.

“These technology companies also suffer from a limited supply of longtime-horizon ‘patient capital,’ which results in an inability to transition technology into military capabilities – even for technologies developed with the help of Federal research grants or contracts,” the Pentagon said. “Moreover, many of these technologies are essential for future defense capabilities but are not purchased directly by the DoD, meaning existing procurement programs are unable to support the relevant companies’ immediate capital needs.

“OSC is part of a broader administration-wide effort to ‘crowd-in’ private capital in areas where our efforts can boost our future security and prosperity,” said Under Secretary of Defense for Research and Engineering Heidi Shyu.

“Our hope is that OSC will be able to strike its first deals by early next year,” she said.

The OSC will be overseen by the Sectary of Defense, and it will be comprised of an advisory council that will “work across policy, acquisition, and research efforts to increase the amount of capital available to critical technology companies,” DoD said.

The new office also will aim to “scale investments between science and technology-focused organizations, such as the Defense Advanced Research Projects Agency, and commercially-oriented organizations, such as the Defense Innovation Unit, by increasing the capital available to critical technology companies to help them reach scaled production,” DoD said.

Read More About
More Topics
Jose Rascon
Jose Rascon
Jose Rascon is a MeriTalk Staff Reporter covering the intersection of government and technology.