LATEST TECH STARTUP IN AUSTIN? DOD: Austin 3rd city picked for Defense Innovation Unit Experimental

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Austin, recently named by CNBC as “America’s best place to start a business” and by the Kaufmann Index as the top US city for startups, is now home to a new startup with an unusual pedigree: the Defense Department. Today Defense Sec. Ash Carter announced that Austin will be the third location of the Defense Department’s technology startup, the Defense Innovation Unit Experimental, DIUx. By establishing a tech foothold in Austin, the Defense Department hopes to leverage reservists and guard corps and help scout for tech that DIUx can co-invest in.

“I created DIUx last year because one of my core goals as secretary of defense has been to build, and in some cases rebuild, the bridges between our national security endeavor at the Pentagon and America’s wonderfully innovative and open technology community,” said Secretary Carter.  “Austin’s commitment to innovation, access to talent and academia, as well as the department’s longstanding ties to Texas make this an ideal next location for DIUx.”

“That Secretary Carter picked Austin is the third site for a defense startup speaks volumes about our role as a tech leader,” said Mayor Adler. “As proud as I am for what this says about Austin’s role as a hub for innovation, I’m even prouder that our city will play a role in protecting our country into the future.”

Initially, the new DIUx reserve presence will occupy space within the well-known Austin technology incubator Capital Factory. It will be led by Christy Abizaid, who previously served as deputy assistant secretary of defense for Afghanistan, Pakistan and Central Asia and on the National Security Council staff. The rest of the staff will primarily be filled by local reservists and National Guard members already working within Austin’s tech community. Abizaid will report to DIUx Managing Partner Raj Shah.

 “This Austin presence will introduce us to even more innovators looking to help America’s warfighters,” said Abizaid. “The entrepreneurs in this area, including many veterans, are working on cutting-edge technology that could benefit our troops. We want to make it easier for them to do business with the DoD.”

Sec. Carter created DIUx in April 2015 to rebuild the bridges between the Pentagon and America tech community. Previous partnerships between the military and technology companies have yielded the internet, GPS, satellite communication and the jet engine. DIUx currently has offices in Mountain View and in Boston.

DIUx accelerates innovation through three teams:

  • a Venture Team, which will identify emerging commercial technologies and explore their potential impact on the battlefield;
  • a Foundry Team, which will identify technologies that aren’t yet fully developed or require significant adaptation for military applications;
  • and an Engagement Team, which will introduce innovators to military problems and the military to entrepreneurs who can help find solutions.
In June 2016, DIUx launched the Commercial Solutions Opening (CSO). The CSO enables DIUx to
do business with technology companies that traditionally don’t do business with DoD. It mirrors the contracting practices that these companies normally use, enabling DIUx to design projects together, and negotiate payment milestones, terms and conditions, and intellectual property rights – all within 60 days.
Since the end of June, 2016 DIUx has found commercial solutions to some of the military’s toughest problems. To be exact, DIUx has signed five agreements for $3.5M – the first in 31 days, with an average time of just 52 days from initial company contact to award. Another 22 projects are in the pipeline, totaling an additional $65m of investment. Because DIUx operates on a co-investment model in which it pools funds with the end-customers it works with, DIUx’s $17 million of R&D spend has been
augmented by $51 million of additional funding by others within the Department. For each $1 DIUx invests in innovative technology, other parts of DoD are investing nearly $3.
The signed agreements, and those in the pipeline, reflect the diverse needs of DoD. They include technology to defend our networks, to use autonomous vehicles to gather data at sea or map the interiors of built and natural structures, to running real-world simulations for better decision making capabilities.

Bunker Labs, a national nonprofit led by veterans to “empower other military veterans as leaders in innovation,” counts at least 75 veteran-owned or -led tech startups in the Austin area.

According to the DOD, the latest defense budget proposed by Sec. Carter includes $72 billion in research and development in one year, more than double what Intel, Apple, and Google spent on R&D in 2015 combined.

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