30. Unpacking the Cycles: Investment and Innovation in Dual-Use Technologies with Ryan Lewis
Oct 31, 2023
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Ryan Lewis, venture capital expert, explores the cyclical nature of tech trends in national security, challenges in the defense industrial base, complexities of involving seasoned and newbie investors in aerospace ventures, and the impacts of geopolitics and market conditions on innovation and investment in defense and tech.
Consolidation in the defense industry has led to a less competitive and diverse defense industrial base, raising concerns about the dominance of a few major players in the market.
Dual-use companies face challenges due to differing growth trajectories and expectations between investors and founders, highlighting the need for clear communication and alignment for balanced market understanding.
Deep dives
Consolidation of the defense industry
The podcast discusses the trend of consolidation within the defense industry over the past 20 years. It highlights the impact of this consolidation on the diversity and competitiveness of the defense industrial base (DIB). The podcast mentions the consolidation of 51 companies into five major players and the potential dangers of the meta-contractors dominating the market. It also raises the question of what type of industrial base the government is trying to build and whether the current consolidation trend aligns with that vision.
Challenges faced by dual-use companies
The podcast explores the challenges faced by dual-use companies that operate in both the defense and commercial sectors. It discusses the different expectations and growth trajectories for software-focused companies compared to hardware-focused ones. It also delves into the misaligned expectations between investors and founders regarding growth, exit strategies, and return on investment. It emphasizes the need for clear communication and alignment between investors and companies to ensure a balanced understanding of the market and potential outcomes.
Increasing market permeability
The podcast suggests the importance of increasing market permeability for companies in the defense innovation base. It highlights the barriers that companies face when accessing customers in a pilot setting and the challenges of obtaining necessary authorizations and certifications. The podcast emphasizes the need for technical on-ramps and an environment that enables companies to deploy trial versions of their products, fostering a dynamic marketplace and facilitating innovation.
Enabling access and testing of tools
The podcast advocates for creating an environment where companies can access customers and test their tools more easily. It references the lengthy process of obtaining authority to operate (ATO) and the need to streamline and expedite such processes. The podcast suggests the creation of app store-like platforms or marketplaces that allow companies to offer their products and services, promoting a more efficient and vibrant defense innovation ecosystem.
Season 2, Episode 30. Today on All Quiet, Tyler is joined by Ryan Lewis, who brings his expertise on venture capital to explore the nuances of technology, national security, and investment. Ryan is currently Partner at SRI Ventures and serves on various boards across different tech sectors, which gives him a unique perspective on the intersection of finance and innovation. Tyler and Ryan cover the cyclical nature of tech trends, the challenges in the defense industrial base, and the complexities of involving both seasoned and newbie investors in aerospace ventures. Their conversation examines both the push for innovation and the realities of geopolitics and market conditions. Whether you're an investor or just intrigued by the confluence of tech and national security, this episode is packed with vital insights.