Wesley Spurlock, Senior Advisor, Office of Strategic Capital (OSC), reached out via email recently with the following update:
“As you may have heard, we have been busy organizing the tools to attract and scale private capital to invest in enabling, and frontier technologies critical to national security.
To that end, on December 3rd of last year, the Administrator of the Small Business Administration and the Secretary of Defense announced the Small Business Investment Company Critical Technologies Initiative (SBICCT). In fact, they were able to make a joint announcement at the Reagan National Defense Forum if you would like to hear it in their words. The SBICCT program supports the financing of new investment funds focused on expanding capital for companies developing or manufacturing critical technologies. Please keep a look out for updates very soon with more details on both the program and application process once it becomes available. The SBICCT is the first of multiple program activities that the Office of Strategic Capital will be announcing this year. We have been working with the experts in this space, many of them on this email, and we look forward to ensuring we get it right and make sure we make the intended impact in this space.
Dr Rathje also had a great opportunity to tell our story to the Defense Innovation Board last month. Beginning around 13 minutes, he talks about where OSC is today and where we plan to go in the very near future.”
OSC and SBA to Sign Memorandum of Agreement
The DoD’s Office of Strategic Capital (OSC) and the Small Business Administration (SBA) Office of Investment and Innovation (OII) announced intent to sign a Memorandum of Agreement (MOA) March 10 at the South by Southwest Festival in Austin. This agreement will outline future OSC and SBA cooperation and builds off the announcement of the partnership on Dec. 3, 2022 for collaboration on the SBIC Critical Technologies (SBICCT) Initiative.
The SBICCT represents OSC’s first program initiative, a joint initiative with the SBA’s highly successful Small Business Investment Company (SBIC) program. It will increase early-stage investment in critical technology areas that require longer-duration, lower-return “patient capital” to develop, such as semiconductors, advanced materials, and biotechnology.
The Introduction of a New Financial Instrument – the Accrual Debenture
The SBICCT Initiative is underpinned by new proposed SBA regulations for the expansion of the SBIC program and the introduction of a new financial instrument – the Accrual Debenture. This proposed instrument will better align with the cashflow requirements of startups in the hardware technology space and provide the “patient capital” required for these companies to become thriving, instrumental partners for the USG and DOD.
“Throughout its 65-year history, the SBA’s Small Business Investment Company (SBIC) program has seeded and scaled some of the most innovative and successful businesses in the world, said Bailey DeVries, Associate Administrator of the SBA’s Office of Investment and Innovation. “From semiconductors to personal computers to electronic vehicles, public-private SBIC partnerships have sparked the growth of new industries by growing startups and sustained small businesses fulfilling critical needs in our domestic supply chain and communities around the country.
“This agreement represents a natural extension of our longstanding partnership with the Department of Defense and a commitment by both of our agencies to be intentional in our efforts to commit capital and resources to private funds aligned to America’s national security mission.”
“The partnership with the SBA has been fantastic, we’ve been able to bring back the SBIC program for national security to make investment opportunities in early-stage technology companies and capital-intensive small businesses addressing today’s most pressing national security supply chain needs,” said OSC Director Dr. Jason Rathje. “By licensing new limited partnerships that are vertically focused on deep technology areas, we can leverage new investment funds to provide patient sources of capital for these critical technologies.”
The Office of Strategic Capital seeks to develop, integrate, and implement partnered capital programs to attract and scale private capital investment to meet National Security Strategy objectives. The SBICCT Initiative is the first of several tools the OSC plans to use to align and scale private capital towards national security objectives.
The DoD’s Office of Strategic Capital Launches Small Business Initiative; America’s Frontier Fund Forms Strategic Innovation Group
