The U.S Department of Defense spends $100 billion a year funding 50,000 scientists in 100 research labs to create innovative new technologies. Now some of those new technologies will be coming to consumers.
Allied Minds, an “alternative investment company” in Boston, has secured a partnership with the DOD to license military-developed technologies, build commercial applications, and create new companies. First-year investment will total $100 million.
“This is a historic opportunity,” Allied Minds CEO Chris Silva told me this morning. “It’s the first time the DOD has ever partnered with a private investment firm.”
Silva has already launched two companies in the new fund, including Allied Communications, which is commercializing high-efficiency spectrum sharing technologies invented by the DOD, and Broadcast Routing Fountains, which is bringing more secure and efficient routing solutions to consumer and government networks. Eighteen more companies will follow in just the first year.
Both exhibit what really excites Silva about the DOD opportunity: already mature technology.
Since one of the roles of the DOD is to provide high-tech solutions for America’s military, the technologies are already in use. They’ve been “enabled,” as Silva puts it, and much of the risk of a new startup — that it is not addressing a real problem, and that its tech doesn’t actually solve the problem — has already been taken out.
Allied Minds invests somewhat like a venture capitalist, but instead of creating a fund, the company forms subsidiaries. The company previously focused on technologies created by university research labs, creating companies like Spin Transfer Technologies, which is commercializing a new kind of “universal” memory chip, a cross between DRAM and Flash, and just took an additional $36 million round of financing.
With the new DOD partnership, Allied Minds has a rich new field of opportunity: innovations from those 50,000 scientists. Silva is focusing investment in five key categories that he believes are “ripe” for commercialization:
- Advanced materials
- Data analytics
- Power storage
But the opportunity is bigger than Allied Minds, and bigger than its initial $100 million investment. So Silva intends to partner with other investment firms and venture capitalists to reach the goal of 100 companies a year.
“We want to be the spearhead, not necessarily do all them ourselves,” he told me.
Allied Minds is an interesting animal in the evolving world of startups. Not a VC, not an angel, not an incubator or an accelerator, Allied Minds takes an ownership stake in every company it starts, and focuses on speed to market. The relatively mature technology it starts with helps, but the company also provides all the back office support, accounting, legal, HR, and other needs a new company has, plus all the funding needed.
The goal, Silva told me is helping CEOs focus on building the business, not on raising money or building infrastructure.
If successful, those businesses will also return some value to the American consumer — and the American taxpayer.