It’s been a little over a year since the opening ceremony for the Capital Factory Center for Defense Innovation (CDI). The CDI is an unprecedented public-private partnership anchored by the upstart Army Applications Laboratory (AAL) that officially opened to the public during SXSW 2019. Towards the end of the first year, the CDI closed out with an unprecedented event for the Air Force: the AFWERX Virtual Collider, Pitch Bowl, and STRATFI Showcase. This first all-virtual AFWERX event included over 2,000 online attendees, 88 virtual pitches, 60 online Air Force and Space Force judges, and 599 government contracts worth $625 million in what Dr. Will Roper called “the largest small biz transaction in gov’t history!”

Not all of the “unprecedented” events were good. The COVID-19 outbreak precipitated a string of economic disasters, including the cancelling of SXSW 2020, nation-wide school closures, and shelter-in-place orders that had Austinites, and billions worldwide, stuck in their homes.

We knew when we started that it is hard for small businesses to work with the government. Not many startups in our community had done much government contracting before this and most thought it was a waste of their time. Knowing that the government contracting process can take a long time, we set a goal of three companies in our community receiving funding in the first year. We thought that was ambitious. We had no way of predicting the scale of what actually happened…

Thirty-one Capital Factory companies received funding through government and defense innovation programs worth more than $63 million.

As we closed out 2019, we knew the numbers would beat our goal. There were a lot of individual examples of companies in our community who had incredible success in finding DoD customers, and these projects were changing the direction of their products and companies. Once we started to pull the numbers together, and the totals got bigger and bigger, the magnitude began to hit us.

Capital Factory companies won awards from:

• Air Force
• Army
• Navy
• Special Operations
• Defense Innovation Unit
• NSF
• NASA
• Department of Energy
• DARPA
• Intelligence Community

Programs and contract vehicles included SBIR, OTAs, AFWERX challenges, AAL’s Capabilities Accelerator, xTech Search, and even a few subcontracts. Federal funding awards ranged from $10,000 to $15 million, with four companies receiving more than $5 million. Two companies received awards in the recently announced AFVentures’ Strategic Financing (STRATFI) program, where the Air Force is making big bets on early-stage companies with disruptive technologies and emergent investor backing.

We’re blown away by the success so far, but we also know this is only the beginning– this is just year one. Capital Factory has taken deliberate steps to learn from, replicate and scale this success.

• We’ve developed specific programs to help our companies understand DoD innovation programs and how to sell to the federal government.
• We’re replicating Defense Innovation programming in Dallas, Houston, and San Antonio to create the awareness and relationships in those markets that contributed to Austin’s success.
• We’ve launched SBIR Accelerator, a deliberate vehicle to connect startups, defense industry, and investors to a funded innovation project and maximize DoD grant funding.

We are energized by the success that Capital Factory companies are finding through Defense Innovation opportunities, and we are excited to support them through year two and beyond. If you want to be a part of the Center of Gravity for Defense Innovation, reach out to one of our Venture Associates and ask about our Accelerator program. Our next SBIR Accelerator kicks off with the 20.3 application cycle!