National Security Innovation Network, Fundings: Atomic Industries, ClimateCrete, Dust Identity
6 December 2023 - A Weekly Publication by New North Ventures
This past week our founding partner, Jeremy Hitchcock, took part in the National Security Innovation Network (NSIN) demo day. It was a vibrant showcase of industry expertise and collaboration in Boston, long one of our nation’s most important innovation centers of gravity for disruptive tech.
A highlight of the event was a compelling panel discussion featuring distinguished thought leaders in defense-tech investing alongside Jeremy, including Alexander Harstrick and Thomas Hendrix. Together, they provided invaluable insights into the dual challenges of securing SBIR funding and constructing companies with dual-use capabilities.
The panelists engaged in a dynamic conversation, emphasizing the strategic approaches needed to thrive at the intersection of innovation and national security. Attendees gained deeper insights into the complexities and opportunities involved in navigating the entrepreneurial landscape, particularly in the pursuit of USG opportunities.
Special thanks to USSOCOM, SOF AT&L Acquisition Executive, Directorate of Science and Technology (S&T), and Decisive Point for their pivotal role in showcasing startups from the Boston cohort.
This event served to continue expanding the ecosystem of leaders from tech, defense and investing coming together to solve our nations toughest problems, and underscored a commitment to fostering innovation and supporting emerging ventures. As the event concluded, connections were forged, and the knowledge shared set the stage for tangible follow-up actions, advancing the mission toward a more secure and technologically advanced future.
At New North Ventures, we take immense pride in our dynamic portfolio companies, and today we shine the spotlight on Reality Defender—an exceptional organization making waves in the innovation landscape.
We are thrilled to announce that the Reality Defender team has been named a VentureFuel Venture of the Year finalist, marking a significant achievement for their dedication to excellence.
Collaborating with the incredible team at VentureFuel has been an honor for Reality Defender, and this recognition as a finalist stands as a testament to their commitment to innovation.
Under the leadership of Co-Founder & CEO Ben Colman, Reality Defender stands proudly alongside exceptional finalists such as Co:Create, Ellevest, Inworld AI, and Sach Foods.
The Nixon Peabody panel discussed the current state of the US Defense Industry, highlighting a steady increase in the defense budget, reaching $816 billion for fiscal year 2023, with priorities in technology, climate change analysis, space initiatives, infrastructure, supply chain improvements, and research and development.
The defense industry has experienced significant consolidation among contractors, leading to increased antitrust and CFIUS scrutiny, expected to continue into 2024.
Private innovation, particularly from companies like Microsoft and SpaceX, plays a crucial role in the US defense strategy. The Department of Defense recognizes the importance of private sector input in data aggregation, cybersecurity, and AI for national security.
Market dynamics reveal a decline in US military spending as a percentage of GDP over time, posing challenges for smaller defense companies. The panel emphasizes the importance of adapting to emerging needs and technologies, with a focus on future defense categories such as cybersecurity, satellite technology, autonomous vehicles/drones, surveillance systems, and language processing. Space innovation, including the United States Space Force, is a key area of attention for research and development funding and potential M&A opportunities.
Exploring the dynamics of the generative AI industry, the piece delves into the dominance of Big Tech, specifically Microsoft, Amazon, and Google. It asserts that nearly all startups and AI research labs rely on these tech giants for essential components such as computing infrastructure, system training, and the deployment of AI products.
The recent incident involving OpenAI and Microsoft underscores the significant impact of financial influence on the trajectory of AI development. The argument presented suggests that those with substantial financial resources dictate the rules, resulting in a race to release AI systems prematurely to maintain market dominance.
Beyond market concerns, the concentration of power in a select few corporate entities raises broader issues affecting democracy, culture, and individual agency. Citing instances like the Cambridge Analytica scandal, the piece highlights potential security threats arising from the dominance of a small number of AI models.
Advocating for comprehensive regulation, the authors propose transparency mandates, liability regimes, and the separation of businesses across different layers of the AI stack. They contend that current regulations often prioritize the interests of a limited group of industry players, emphasizing the need for meaningful accountability that prioritizes the public's welfare over corporate profit motives.
BlackRock's initial emphasis on purpose-driven and sustainability-focused investing has shifted towards prioritizing profit potential, evident in its $550 million investment in a Texas carbon capture project.
A two-year backlash against ESG, particularly from US Republican politicians, has led to increased caution and resistance in the financial industry. Red-state treasurers blacklisted major financial groups, and laws limiting ESG considerations were passed, creating a transatlantic rift.
Despite the backlash, green infrastructure and transition investment funds continue to attract cash, but there is evidence of skepticism and challenges. Investor support for ESG-related proposals has declined, and major financial groups have pulled out of net-zero alliances.
The poor performance of ESG-themed investments and weakening demand pose challenges to the sector. Investors have pulled over $14 billion from US sustainable funds in the past year, and ESG bond issuance has slowed, indicating potential shifts and challenges in sustainable investing.
Key People: CEO Aaron Slodov Ph.D
Elevator Pitch: Hard-tech products intended to build a more efficient and less wasteful world.
Funding: The company raised $17 million of seed funding in a deal led by Narya on December 5, 2023, putting the company's pre-money valuation at $23 million.
Key People: CEO Peter Hadrovic JD
Elevator Pitch: Concrete intended for producing sustainable concrete with a reduced carbon footprint.
Funding: The company raised $3.3 million of venture funding from KAUST Innovation Fund and Capital K on December 5, 2023.
Key People: CEO Ophir Gaathon Ph.D
Elevator Pitch: Technology-based security tag designed to create an unclonable identity layer on any object.
Funding: The company raised $40 million of Series B venture funding in a deal led by Castle Island Partners on December 5, 2023. Airbus Ventures, Oxygen Esports, Aramex Ventures, 8VC, and Kleiner Perkins also participated in the round.
Look for a new episode of Securing the Future Podcasts wherever you listen. In our latest episode, we have guest Austin Grey sit down with General Partner Jeremy Hitchcock for an engaging conversation about innovation in the defense space.
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