A highly worthwhile few days at Specialist Defence and Security Convention UK (SDSC-UK) culminating in yesterday's panel session on Agility Acquisition and Funding, featuring our director, Dave Seaton.
There were some vibrant discussions around how operational needs can be delivered through more collaboration and agility, balanced with the funding challenges facing defence SMEs in today's turbulent times, heightened by increasing threat levels.
Key takeaways for defence and national security SMEs seeking early-stage funding:-
It’s still a tough market to source funding in the defence sector but attitudes are changing driven in part by increased threat levels and therefore a very real need to support young businesses who address high level national security issues.
You need to look beyond traditional lenders who have little appetite for the defence sector towards specialist funders and appreciate that some government grants can be difficult to procure for cash- and time-strapped young businesses without the support of someone who knows their way around the system.
But there are some worthwhile government-backed initiatives in the form of Specialist government backed VCs … UK Innovation & Science Seed Fund; Ploughshare
Organisations such as UK JHub, NATO DIANA and the US DIU are doing some great work helping SMEs access opportunities.
Other routes to early-stage funding include:-
Grants and R&D tax rebates … the latter necessitates spending money first and then claiming it back
Commercial specialist defence and national security VCs …; incubator funds of the large Primes in the space ( Airbus, Lockheed Martin etc). Relationships with Primes can add substantial value by opening up channels to market and addressing financial thresholds required by buyers.
High Net Worth Individuals … all early start ups tap into angel money first before rolling out to raise money from VCs and eventually PE Houses
Family offices offer individualised funding strategies based on the family’s discretion and priorities, and those appreciative of the threat levels are increasingly active in the sector.
Dual use (defence and civilian) solutions or products that address a high-level national security risk attract wider interest levels
The moral – it’s a difficult funding landscape to navigate and you can save time and resources by working with an expert in the field. Tapping into their network and knowledge can afford a faster route to securing the right funding on better terms.
A huge thank you to Specialist Defence and Security Convention UK (SDSC-UK) for hosting such a valuable event and for bringing the industry closer together to promote collaboration and innovation.
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