GLOBAL DEFENSE MARKET

JUST IN: New AUKUS Investor Group to Accelerate Emerging Tech Development

12/8/2023
By Josh Luckenbaugh

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Innovation company BMNT Inc. on Dec. 5 announced the creation of the AUKUS Defense Investor Network, which is dedicated to accelerating the development of advanced military capabilities for the trilateral partnership between Australia, the United Kingdom and the United States.

The U.S. Defense Investor Network was founded in 2019 by BMNT entrepreneur-in-residence Heather Jo Richman, who described the network as “a thing that’s not a thing.”

The network does not have or take funding such as dues, is not incorporated or a nonprofit, Richman, who now chairs the U.S. network, explained in an interview. “It really is just a network … where investors who are either very well-versed in national security investing, or not at all versed in national security investing, can come and share thoughts and hear from senior leaders, from program managers, from people that are really trying to get these things done inside of our Department of Defense and intelligence community.”

Defense investor networks also exist in the United Kingdom and Australia, and “we thought it made a lot of sense that … as our countries are figuring out how to work together, our private capital communities also need to figure out how to work together and figure out what that means,” Richman said. “We talk about mission acceleration and innovation at the speed of trust, and the more that we can really build the bridges between the various investment [and] private capital communities in those three countries, it's going to be a benefit to everybody.”

Co-chaired by the leaders of each country’s network, the AUKUS Defense Investor Network consists of leading private capital investors from more than 300 institutional venture capital firms, corporate venture capital groups and family offices from the three partner countries, representing more than $265 billion, a BMNT press release stated.

“Access to private capital is vital to help scale the innovative dual-use companies who are important suppliers to defense and the wider national security community,” John Ridge, chair of the AUKUS Innovation Working Group, said in the release. “I am excited to see the creation of an AUKUS Defense Investor Network, which I hope will increase awareness and understanding of our shared security challenges across the venture capital community and help our cutting-edge companies bring their creativity to bear against some of our toughest national security challenges.”

The network will focus on Pillar 2 of AUKUS, the goal of which is to develop interoperable, advanced military capabilities in emerging technology areas such as cyber, artificial intelligence, quantum, undersea capabilities, hypersonics and counter-hypersonics, electronic warfare and information sharing — “areas where private sector investment can accelerate government investment in developing solutions to critical security challenges,” the release said.

In a Dec. 1 joint statement, U.S. Secretary of Defense Lloyd Austin, Australian Deputy Prime Minister and Minister for Defence Richard Marles and U.K. Secretary of State for Defence Grant Shapps said they welcomed the creation of the AUKUS Defense Investor Network, which will “facilitate targeted industry connectivity.”

The three leaders announced several initiatives to increase industry participation in AUKUS, such as convening the first AUKUS Advanced Capabilities Industry Forum in the first half of 2024, and launching a series of innovation challenges in which companies from across the three countries will be able to compete for prizes on a common innovation challenge topic. The first innovation challenge in early 2024 will focus on electronic warfare.

Richman said the AUKUS Defense Investor Network will be “piggybacking” on other AUKUS events, as well as holding network-only meetings.

“Meeting people in person is always … amazing. It's a different level of getting to know someone and trusting someone,” she said. “So the more that we can take advantage of those opportunities, especially when there are large events where we've got people traveling internationally already … it is really important to get together and to build that trust.”

The more investors can talk and understand each other’s approach, as well as gain insight into each military’s capability needs, the more effective the network will be, she said.

From venture funds to private equity firms to family offices to high-net-worth individuals, everyone “has a different investment thesis,” she said. “I'm just finding that the more that all of these different groups learn about true threats, real threats, how they can help, what capabilities are needed, how that's going to work … the more they know, the more they know. And the more they know, the more they understand, and so they're willing to do things a little bit differently.”

Along with managing different time zones, the network will also need to have “constructive conversations, making sure that that we're being realistic about the value” of different investments or technologies “to each of the countries,” she said. Potential reforms to export laws such as the U.S.’ International Traffic in Arms Regulations are “top of mind for a lot of folks,” so “it'll be interesting to see what happens and what sorts of challenges we are able to tackle [or] aren't able to tackle,” she added.

Despite just starting out, there’s “a lot of excitement already” for the AUKUS Defense Investor Network, Richman said.

“The idea that we can go back to our [Office of the Secretary of Defense] and say, ‘This is what we're hearing, this is what's happening. This is in real-time, real feedback from the private investment community,’ I think that'll be helpful,” she said. “Where there's industry and growth in industry, there's private capital,” and in the early stages of AUKUS and the Defense Investor Network, “we need to make sure that our countries are aligned on where that's going, and any signaling that’s coming from inside, reaches those that most need to hear it.”

 

Topics: International

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