Lockheed Martin Ventures (LMV)
- Chris Moran, Executive Director and General Manager of Lockheed Martin Ventures, discussed his journey into venture capital and his current role at Lockheed Martin.
- LMV focuses on strategic investments in companies developing cutting-edge technologies aligned with Lockheed Martin's core businesses and new markets.
- The team maintains constant communication with business units to understand their needs and ensure investment decisions align with the company's long-range plans.
- Investment decisions start with a top-level screen of technologies closely aligned with the Department of Defense's critical technology areas, followed by specific needs identified through regular discussions with business units.
- LMV operates with an investment charter that allows for independent investment decisions without requiring specific business unit approval, ensuring agility in deal-making.
- A win for the team is when Lockheed Martin begins utilizing a portfolio company as a teammate or partner, integrating their technologies into the company's operations.
- LMV invests in companies that are suppliers to Lockheed Martin or have complementary technologies.
- LMV tracks the amount of operational spending Lockheed Martin gets from its portfolio companies and reports on it quarterly.
- LMV's investment hurdle is to double its money in five or six years, which is lower than traditional venture capital firms.
Notable Investments
- Firestorm: A modular drone company that LMV invested in. Its drones are low-cost, field-buildable, and can be customized for different missions.
- Crossbow: A solid rocket motor company that LMV invested in after the FTC blocked Lockheed Martin from buying Aerojet Rocketdyne. Crossbow has won a major contract with the Navy.
- Terran Orbital: A small satellite manufacturer that LMV invested in early on. Terran Orbital has won two major contracts with Lockheed Martin since the investment.
Challenges and Opportunities in Defense Innovation
- Disruption in the defense industry is inevitable, as seen with small satellites replacing big ones and drones challenging traditional missile systems.
- The aerospace sector is less vulnerable to disruption due to the high costs of developing and fielding new aircraft.
- Electric vertical takeoff companies are gaining traction and pose a potential threat to traditional helicopter manufacturers.
- The conflict in Ukraine has highlighted the vulnerability of GPS-guided munitions to jamming and the need for anti-spoofing and anti-jamming technologies.
- The US government is not necessarily behind its peers in technology, but there are areas for improvement such as bioengineering, advanced autonomy, and counter-UAS systems.
- Balancing investments in new technologies with responding to calls from the Department of Defense (DoD) requires careful attention to DARPA solicitations and identifying emerging trends.
- The DoD is aware of the asymmetry between the cost of threats and the cost of mitigation and is seeking to prevent attacks rather than relying solely on expensive countermeasures.
- The slow rate of technology uptake in the government is a challenge for small companies that need a constant flow of revenue, and there is a need to find ways to support these companies while ensuring that the technology works effectively.
Advice for Founders and the Future of Defense Innovation
- Advice for the next generation of founders is to be persistent, network with people in the industry, and be willing to take risks.
- Corporate venture capitalists (CVCs) often get a bad reputation, but they can offer valuable strategic benefits to startups.
- When considering a CVC investment, founders should interview the investor to understand their strategy and alignment.
- CVCs vary in their focus, so it's important to find one that aligns with the startup's goals.
- Lockheed Martin Ventures (LMV) provides value to founders beyond funding, including access to a network of potential customers and partners, as well as ongoing support and promotion.
- LMV has a continuum of capabilities, from early-stage investments to growth equity and M&A.
- The recent acquisition spree by Anduril Industries, another defense contractor, is seen as a positive development as it brings new capabilities to the defense industrial base.
- LMV is interested in investing in AI compute, particularly in edge processing and inference engines.
- The government needs to provide a consistent series of requirements and buying patterns to attract capital to early-stage technologies.
- Opening up channels for technology to flow more freely between allied countries can create bigger markets for startups.
- SpaceX disrupted United Launch Alliance (ULA) by being willing to invest in innovative technologies that ULA was not able to get funding for from the government.
- The speaker's firm tries to help prevent a SpaceX from disrupting Lockheed Martin by investing in startups that are developing innovative technologies that Lockheed Martin may need in the future.
- The speaker highlights the different approaches to risk and failure in the government contracting world and the venture-fueled world.
- Despite criticism of Lockheed Martin's lack of innovation, the company has achieved significant milestones, such as the successful sample return mission from an asteroid.
- The speaker notes the growth in the number of government organizations that can access SBIR and OTA dollars, increasing opportunities for small companies and startups.
- The speaker emphasizes the importance of understanding the defense department as a customer and aligning business strategies accordingly.
- Lockheed Martin is seen as a critical part of the emerging ecosystem for defense innovation, but there is an impedance mismatch between creative funding and the government's procurement process.
- The defense department lacks a formal process for incorporating innovative ideas that are not explicitly defined as requirements.
