The Pentagon, headquarters for the U.S. Department of Defense. Photo: DoD.

Defense Secretary Lloyd Austin on Dec. 1 established a new U.S. Department of Defense office charged with helping companies that are developing technologies critical to national security partner with private capital to help them get the financing necessary to ensure these technologies transition out of the laboratory and into production.

The DoD said that the targeted companies lack long-term capital, which prevents them from transitioning their technology into military capabilities, even when they have benefited from federal research grants and contracts. These technologies also aren’t purchased directly by the DoD, which means procurement programs can’t help them with capital needs.

“We are in a global competition for leadership in critical technologies, and the Office of Strategic Capital will help us win that competition and build enduring national security advantages,” Austin said in a statement. “By working with the private capital markets and by partnering with our federal colleagues, OSC will address investment gaps and add a new tool to the department’s investment toolbox.”

The DoD said that unlike other offices that rely on grants and contracts to deploy capital, the OSC is exploring credit tools such as loans and loan guarantees to fund companies working to transition technologies.

The types of technologies that typically require long-term financing to bridge the “Valley of Death” between the lab and production include advanced materials, next-generation biotechnology and quantum science, DoD said.

Heidi Shyu, under secretary of defense for Research and Engineering, said the goal is to have the first deals done in early 2023. The OSC is part of Shyu’s office and will have an advisory council that includes the under secretaries of defense.

This story was first published by Via Satellite sister publication Defense Daily.