Bethesda-based defense contractor Lockheed Martin has announced it will double the size of its technology investment fund from $100 million to $200 million, a move it says was enabled by tax savings under the Republican tax bill passed last year.
The fund, which was started in 2014, makes small investments in start-ups whose technology might have military applications, bringing Lockheed into emerging fields such as self-piloting submarines, artificial intelligence and quantum computing.
The goal is to absorb innovation that is happening outside of government-funded labs and reach out to organizations outside the Beltway. Defense contractors such as Lockheed are often criticized for falling behind West Coast firms when it comes to technology innovation.
“There’s a growing sense that [large defense contractors] are missing out on commercial innovation, and the pace of commercial innovation is accelerating,” said Chris Moran, executive director of Lockheed Martin Ventures.
Moran faces the daunting task of representing the world’s biggest defense contractor in a Silicon Valley tech scene where the work of military agencies is sometimes frowned upon. That cultural divide flared up last week when Google indicated it will back out of a Defense Department initiative called Project Maven, under which the Internet giant’s artificial intelligence was deployed to rapidly analyze massive quantities of drone footage.
“Silicon Valley is a bubble — its own ecosystem and environment,” said Moran, who worked for a Santa Clara, Calif.-based semiconductor company before joining Lockheed.
Contractors such as Lockheed Martin and Boeing, which operates a similar investment fund called HorizonX, are trying to bridge that cultural gap by approaching innovative start-ups outside the Washington region and investing in them, effectively buying a seat at the table.
Lockheed’s fund managers are not overly worried about extracting a profit from the companies they invest in. Rather, they are after advanced intellectual property that could reshape the U.S. military’s arsenal.
“The goal is to access technology, and the way we’re doing that is by making investments,” Moran said.
The fund has invested about $40 million in eight companies since 2016, spanning a striking range of technology areas.