Making Dual-Use Tech an Economic Priority
Emerging technologies like global positioning satellites, quantum computing, and artificial intelligence hold immense value for commercial and defense applications. When these technologies are developed for dual use, they can help our country stay competitive – and protect our own national security in the process.
Dual-use tech can create jobs, keep our country competitive, and let Americans live more comfortably. Meanwhile, those same emerging technologies and capabilities can help people survive on the frontlines and thwart cyber attacks.
For these breakthroughs to continue, the global investment community must, frankly, join the growing community of venture capital outfits in financing those early-stage companies focused on dual-use technology, instead of just focusing on silos of ‘defense’ and ‘civilian’ tech.
Since the 1950s, dual-use technologies have become key for advancing commercial sectors while bolstering national defense. Every day, people unknowingly use items developed by the military. A few of the biggest contributions are things like the first version of the internet, GPS systems, and microwaves. However, the tempo of innovation is starting to slow as startups focusing on dual-use technology struggle to find enough funding to benefit civilians and the military.
While federal initiatives have been made to direct funding towards dual-use startups, the private sector can commit higher amounts of capital in a shorter period. As federal entities struggle with red tape, venture capitalists can pledge millions towards dual-use commercial and defense technology.
Recently, a fund of over $120 million was established to support entrepreneurs working on the applications of AI, space, autonomy, and cybersecurity. If completed at a wider scale, these investments would sustain dual-use breakthroughs for the long term. But the interest in defense tech startups isn’t high enough to make this a reality.
Last year, many funding milestones were made for defense tech companies. One raised almost $1.5 billion for its Series E round, and this was the fourth-largest VC-backed funding deal that year. However, defense tech startups saw a measly $2.1 billion in total investments versus cybersecurity counterparts that garnered over $10 billion.
The divide shows signs of shrinking as venture capitalists are starting to see the benefits of dual-use tech. Not only are dual-use startups faster and easier to scale, but they hold more promise for generating revenue earlier.
The only problem preventing many venture capitalists from flocking to dual-use innovations lies in a difference of values. Respect for privacy and freedom has been an undercurrent in the tech world since its inception. Attempting to merge future-focused Silicon Valley startups with government partners results in conflicts like Google’s employee protest against its Pentagon contract.
However, the future can be brighter if we take a wider look at the duality of this niche.
Instead of proposing ‘winning’ concepts that exist in a vacuum that affords limited possibilities for profitability and usage, dual-use technology allows investors and companies to double their chances of success and impact. By thinking with two audiences in mind, companies can scale rapidly, employing local talent, and defense leaders can protect our nation’s most vulnerable assets.
Venture capitalists have always fueled innovation through strategic investments and additional services like mentorship. For example, Ultratech Capital Partners, – a member of the US DoD Trusted Capital Marketplace program, provides companies critical to national security with access to funding and mentorship, from inception to emerging technological breakthrough realization.
Once the mindset toward dual-use tech shifts into a positive realm, the potential for success is limitless. Make no mistake. This sector will enable us to compete as a nation and to enhance ourselves as a society, which every American should find crucial.
By prompting the private sector to drive investment and development, our citizens will dictate what inventions are later integrated for defense. If financers intentionally avoid dual-use ventures, the space will become stunted in capital and value, leading to foreign dependence and vulnerabilities.
As the arena of emerging technologies grows and diversifies, dual use will remain a highly profitable backbone of the industry. Venture capitalists who want to receive any of the financial or social rewards of accelerating development and the launch of new products will have to get involved. A fund dedicated to dual-use technologies could be created, or existing startup accelerators and firms could prioritize the sector.
If dual-use technologies become another responsibility for the government to support, the value for civilians will plummet. To expect any riches, investors must actively support these startups in finding funding and creating profitable business models.
The global investment community has the connections and knowledge that many of these teams do not. If investors spent a little time researching the market and providing financial and business resources, they would diversify their portfolio with highly profitable ventures.
Dual-use technology is not going anywhere. Countries across the globe are taking an interest in this sector, whether they are looking to create violent machines or to elevate humanity. It may be hard to tell the difference, but the private sector should not focus on these pitfalls.
Investors can turn their attention to out-innovating foes rather than monitoring their behaviors. That way, startups receive the capital they need to navigate regulatory labyrinths and start making sales that will improve everyone’s lives.
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