The perception has some truth: venture capital activity across the defense technology ecosystem remains elevated compared to the overall landscape of VC activity in tech.
Pitchbook, a database and news service focused on private capital, estimates that VC investors put $35.8 billion into startups across 800 transactions during 2022. VC backers have invested $34.9 billion across 627 transactions in 2023. So far in 2024, $9.1 billion has been invested across 228 transactions.
Contrast that to Pitchbook’s not-great summary of the larger environment for tech in 2023.
It therefore makes sense for federal technology integrators to get involved in the action, as ManTech has done through its new partnership with the national security-focused Marque Ventures firm.
They will work together to identify emerging national security tech and bring new providers, including startups, into ManTech’s offering ecosystem.
“One thing they will do for us is help provide that that second set of eyes and early betting of some of the technologies where we do have an opportunity to bridge those cables,” ManTech’s chief innovation officer Eric Brown told us. “We’re looking at this at a wide aperture and trying really be the matchmaker in how we bring emerging technologies at speed and scale for our clients, especially around the practice areas that we’re focused on.”
That list of practices includes data, artificial intelligence, cybersecurity, intelligent systems engineering, mission IT and cloud computing.
Founded in 2022, Marque tailors much of its investments toward companies whose deep tech innovations show promise for government application and particularly in national security.
Deep tech refers to solutions that are based on substantial scientific or engineering challenges. Those creations require lengthy research-and-development and large capital investments before successful commercialization and scaling.
Government agencies both have to make sure the technology they buy can scale and often run into difficulty doing so at the same time.
Brown said that is where ManTech’s innovation and capabilities organization comes into play for the partnership, where that group can influence the design principles around the tech. Portability, extensibility and security are the three themes Brown mentioned as priorities for ManTech in looking at the tech from Marque’s portfolio companies.
The conversation about investing and technology in government naturally works its way toward the so-called “Valley of Death,” which refers to the gap in acquisition that keeps new prototypes from becoming funded programs of record in budgets.
Far too often and for many reasons, that coincides with a second valley of death that refers to the phase of a startup business when it needs more financing to finish the development of its core offerings. Startups cross the business valley of death when they achieve enough sustainable cash flow to keep going.
Brown said the funding profiles of ManTech’s government clients make tech transition inherently hard to do because the colors of money often prevent that from happening.
“We’re looking at non-diluted funding sources to help kind of drive and help the specific investments, or the port codes that would be affiliated with Marque,” Brown said. “It’s not dissimilar to the same thing that Silicon Valley has to see, they live revenue stream to revenue stream. It’s important to have the right partners that have the deep mission understanding in order to be able to create that happy marriage.”