Using Venture Capital to Improve Army Research and Development

摘要

The U.S. Army is having difficulty balancing its need for new technologies with the resources available to develop them. Since it is unlikely that the Army will devote substantially greater resources to its research and development (R&D), the Army must find better methods for developing the technologies needed to stage its revolution in military affairs (RMA) while keeping current equipment relevant and affordable. This issue paper introduces the idea that the Army should fund some of its technology development through a private venture capital organization. The concept exploits venture capital's efficiency in developing technology, its access to the growing commercial technology sector, its capacity to respond with agility to changing technology, and its ability to leverage additional resources throughout the development cycle. Venture capital describes a number of investing schemes that have two common characteristics. First, venture capital is generally targeted at new companies that have a concept, a plausible market, and a business plan but lack the resources to develop and market the concept. The risks associated with such investments make other types of financing unavailable and allow the venture capitalist to demand large rewards: most often, an equity stake in the funded business. Second, venture capitalists usually provide more than just money. They actively help manage and promote the businesses they are backing.