DON IT CTO Tech Track - In-Q-Tel Brief

Transcript

Ladies and gentlemen, thank you for coming here today. Um, I know it was kind of a bit obscure place to find uh with respect to today's space track. Um, again, thank you. I'm Captain Andy Gibbons. I work in ASNRDA.

I am a senior military acquisition advisor for ASNRDA. Uh, right now, Dr. Brett Cidle, uh, as that position is vacant until, uh, until a replacement is appointed. That being said, uh I have the opportunity to look across the Navy, the naval force, to look across the different services in my role as essentially the programmatic, the strategic and the technical adviser to a RDA uh to accelerate the delivery of capability to transport or move data securely anywhere across the globe with a specific focus on space. um not putting up satellites in space.

We have a gentleman here for that who wears a Space Force Air Force uniform. He'll talking about he he'll be talking later today. Uh but in particular, how do we take advantage of space? And when I say take advantage of space, I mean take advantage of military, take advantage of commercial, take advantage of any opportunity we can to get after again moving data securely around the globe for our war fighters. When I was in a Space Force meeting one day at a at a higher classification, this uh organization came up the brief. Their name was Incutel, I was like, well, that's a really interesting name for an organization.

And it took me a while to understand what they did. And when I realized that they were actually investing in and leading the delivery of um capability to the war fighter from a different perspective, I was like, "Hey, they're taking advantage of companies that I had been utilizing and leveraging when I was a program manager in PMWA 170 just a year prior." And I found it ironic that they were investing in companies as a venture capital firm and directing and steering how they were developing their tech. and I was trying to do the same thing from the programmatic side. And the irony was that we were both trying to get after the same end result, getting capability to the war fighter. Um, and I said, "Wait a minute, we have to team up." So that was the first time that I had dealt with or started to really deal with what we call venture capital from a perspective of uh how do we adjust uh or how do we steer these technical companies to do what we want to do but also maintain their dual use capability for them as well because again we want them to make money on the commercial side.

So without further ado, I asked them to come here, both Coley Lewis, Miss um Kate Baldwin to give a presentation um to explain to you what they're doing uh for the war fighter and for the IC. And my objective working with ONR, with Naval X and others and RDA is to give the access to Inqutel for the naval service as well. Uh because right now it is a very limited scope for the naval service to take advantage of their benefits. Um, so I think it's going to be a huge gamecher uh for us to be able to uh work with them more closely. So I always tell them I apologize for being their their their pitch man, but I end up being pretty much all their pitch man because I want to see us working closer with them as another tool in the toolkit for our ability to deliver capability.

So without further ado, I'll turn it over to Kate and Coley. Thank you both very much. All right. Thank you, Captain Gibbons, for that lovely introduction and for the opportunity for Kate and I uh to speak here today to this group here. We're excited to be here because I one of the things we've kind of focused over the last several years that while we were um created by the CIA over 25 years ago, our focus and our mandates across the whole national security space, we want to make sure that we can explain to as many people as we can how that our services are available to help out to different mission needs.

So, we're going to cover quite a bit today. Um we're going to definitely allow time for questions at the end if you want this to be more interactive than us just kind of going through slides. I think that there's going to be a lot of presentations today. You're going to see a lot of that. So, we want to make sure that we can make this interactive experience here.

Can everyone hear me? Okay. I'm kind of screwing with the mic a little bit. All right. Wonderful. All right.

So, here's what we're here's the general plan that Kate and I are going to go through here today. And and first, we're going to give an overview of IQTC kind describing our overall model as well as our approach to delivering enhanced capabilities for whether it's a warfire or for an analyst. And then our investment approach because we we kind of fit in a unique space there. While I think a lot of people kind of will bucket us as a venture capital firm. While we have one foot in the venture capital arena, we are unique and different as a 501c3 strategic investor.

Navy work program example. We have a couple here that we've done over the last year that have proven to be uh create quite a bit of impact for uh two Navy partners that we've been working with. And then some examples of our portfolio pipeline. So the way we look at the technology landscape is that we break it down into five different parts. And we'll get into a little bit later.

And before we go too much into the model, I should get a little explained who Kate and I are. Um uh my name is Coley. As as Kevin Gibbons mentioned, we lead our growth partnerships team here. Kate and I both in that team. And one thing we are going to looking to do is looking across the national security space to see where there synergies where what InQel does.

our lines of effort may be able to benefit uh different members of the DoD, the IC as well as DHS and other critical infrastructure partners. And then Kate here obviously leads a lot of those engagements and she's worked very closely with Navy over the last year to help execute two uh successful work what we call work programs at IQT. All right, very detailed here. All right, so this is small print. So don't worry, I will we'll cover it piece by piece here.

You always you never can wait till when you create a slide and think oh looks great here and then you get in a bigger screen like oh it's not what I thought so we'll have to make some modifications here but I'll go through each piece here. Um our mission for the last 25 years we are established as a 51c investor by CIA and our focus has been to be the trusted bridge between the government venture capital and commercial startup companies. What we do is through strategic investment leverage the global innovation startups to deliver enhanced capabilities uh for our national security partners and this comes through different means of doing that. So one of which is to enhance capabilities but it's also an information piece. Uh some of the biggest advantages we can provide to our national security partners is information what emerging technologies what our adversaries are are contemplating where they're spending their money uh in different companies.

we can give you that insight and with with our with our model. How do we go about doing that? We have seven offices globally. We're headquartered in Tyson's, Virginia. Our second largest office is here in Northern California in Menlo Park, California, which is sits most of our investment team. We have an office in Cambridge, Massachusetts, where it's a lot of startup activity there.

So, we have an office there. We have four offices of overseas. First we office uh opened offices in London and Sydney in 2018 and 2024 I believe we opened our offices in Singapore and Munich and that is get given us the ability to make sure that we really are close to the ecosystem of startup companies across the globe. Before we opened offices overseas we made about 15% of our investments were uh okonus but with you kind of go there you'd visit you'd leave and you kind of had didn't where you really weren't part of the community. So by opening sto opening up offices there really had a chance to sit down and get a better in touch with the community and some of the startups that were that were coming up there.

Government partnerships uh we have 14 across the IC DoD and and DHS and they're the really the cornerstone each of our partners have established a team an interface team. So one of the gentlemen here in the audience is one of from the Navy team no ma right there in the front row won't acknowledge us I put his hand up. There you go. um they're a big part of our model working with the government partners. So each and we'll get a little bit later, but they each have established a a unique center where we interact with them to be kind of the the front door to working with in this case with the Navy or another partner.

There's two main lines of effort that EQEL spends its energy in. One is capability delivery through strategic investments. The other is through global investment outreach and insight. So the first one is that uh we are a strategic investor. We make about over 70 investments a year.

There's two types of investments that EQEL makes. One is through work programs that we invest uh dollars to enhance capabilities. The other is with is equity only investments. So when a company is im young still kind of get its feet under itself, we will invest amount of seed money into that company to help develop it out of our proceeds to make that one point help it convert to a work program. Global investment outreach.

So when we as we go out there and understand the commercial market, our tech and investment teams develop unique insights into what's going on there, what companies are emerging, what technologies are trending in certain direction that we think that our government partners should be aware of. And so there's three different types of uh information we provide to our government partners. One is through technology scouting. So we meet with over a thousand companies a year. We provide that information back over to our government partners for their for their review, situation awareness.

We do a global competitive analysis. So we look at a certain tech space whether it's quantum or counter UAS and they come back and say here's what that space looks like across the globe. Here's what where China is spending their money and time and energy and here's how we think that we the US which direction they are going in right now. Finally the insights it's a new product line that we started about two years ago and what it does is it takes our situation awareness products and adds our the analysis of our investment and tech team to certain areas whether it's a biofocus area counter UAS quantum micro electronics our teams take a chance to to produce these what we call insights into areas that we think their government partners might be interested in now a big part of our is the convenient part which we've been doing for over 25 years working kind bring together three unique worlds together at the same time. So from the commercial startup side, many startups we encounter um in some cases do not really know how to work with a government.

So by us investing in them, we can kind of give them access to our government partners and align to an area that's going to benefit the development of their technology. On the investor side, we have a deep tech staff and I think a lot of the VCs that we work with really appreciate our technical diligence we put into these companies. they have a sense of confidence that the this company is trending in the right direction. So we often we always will co-invest with a number of VCs and on the government side not just we looking to develop new capabilities technology is going to help the war fighter but as well as provide them information that's going to helply put them at an asymmetric advantage against some of our adversaries. One of the areas that you can tell takes a great amount of pride in is our diligence.

And it's not just technical diligence which we which we take great pride in but there are other areas where not just with a global footprint that we have financial diligence as well as security diligence against a lot of the companies that we are looking at right now by technology is important in in today's world. There's also a level of is this company going to be able to survive after six months? Is there any types of challenges or integrity concerns to the technology that we should be aware of? So we take the each aspect of these areas and take it a good amount of time making sure that when we talk about investing in a company to for one of our government partners that they have a good level of confidence that that both financially the company's going to be able to exist within six to 12 months that we're going to help them chart a pathway for greater commercial success. security-wise working with CIA as well as our security team to make sure that we have a high level of confidence that there the technology has no not going to be compromised in any way technically we have a deep team that's going to look at other a whole the range of startups in this certain area and with seven offices around we have a good sense of what's happening uh globally jump yes please back a lot of concerns recently recently. So you have the CIA, correct? That's correct. A lot different.

We see a lot of commercial vendors because commercial vendors, especially the commercial vendors that are, I'll use the term, you know, not looking to invest in the military, do military work, they don't realize the fact that um they're under attack, lack of a better term, by our enemy. So can you talk to a little bit more about you know how you feel more comfortable working with some of these startups because you have the CIA backing does that make sense? Yeah it does. Um so as this group I can imagine when you invest in number of startup companies they have a a fair amount of foreign nationals. They have other foreign investment involved because no longer there are the best startups solely domestic here but they are across the globe. So what we want to make sure is that we invest in these companies that uh CI does a secure vetting of all the people on staff at the company to ensure that that there's no there's no uh individuals that could be challenging for the technology there.

So they before we can close any transaction, we must get the a blessing of our executive agent before we can proceed forward to making sure that there's no uh challenges to the technology that they can flag early on. Mind is also couples what we're doing from our own security team there. So combined we think we have a really well- covered uh make sure that the technology is going to not work. It's not because of some type of uh security challenge. Correct.

Cole, if if I may too, I just want to echo a point here. Um working with startups, right? Like you're you're thinking about the traditional vendor capital model and you're um you're thinking about taking a significant amount of risk, right, for something that can have a large amount of impact or a large amount of payoff. With that being said, um we want to make sure before we do any investment that it's a smart investment and that we are being diligent on behalf of our government partners, which is why we really go deep into all four of these layers, right? So making sure that on a global stage, what else is out there? Where's the best-in-class technology? What are other markets doing outside of Silicon Valley or outside of the US? On the technical side, making sure that the company has feasibility. And that's where Coley alluded to our our very deep bench of technical sme or other strategic investors do not have. Um on the financial side again our Menllo Park office is investment professionals who have done this for their whole entire careers looking at what is the runway of the company who is the CEO what sort of bandwidth do they have? Does this make sense for their commercial um traction etc.

And then the security side which in this day and age is um incredibly important. And so we package this together in a 20 30 page document to really outline where do the risks where are we assessing the risks but where are we also assessing the impact so that our government partners can be informed about why they're making this decision or choosing to make this decision question and and so what is the uh track record for uh for IT uh how many of the venture startups that you recommended people invest in survive you have any n metrics uh I don't have an exact I mean we've made close to 800 investments over our time frame a number of those companies have been sorry number of those investment those companies have been acquired over that over that period of time some are still existing there are some that usually I'd say that the rarity sir would be that during the course of a work program which is usually a 9 to 18month engagement where a company has uh gone out of out of business. I that that is something that now whether or not they post work program they they continue at what level they continue I say we have a pretty high track record there um of our yeah it's a big part we we because we make an investment in a company we have investment team members they sit as board observers on the at those companies non- voting members at that company they can kind of provide guidance along as well as bringing together other potential VCs to help support the company to raise another round uh put a bridge together if they're in type of trouble And just to add to that um again um you know working with this model it um companies will get acquired right the things do happen to startups um but having this intel structure allows us to help um our government partners navigate that also when a company gets acquired if we were doing a work program a lot of times they're still able to access that technology at the new parent company and we facilitate that transition. Speaking about track record though, 70% over 70% of our work programs get to what we call a pilot phase which is we get the enhanced technology into the hands of the government partner to test to evaluate and to assess and over half of our companies get to the adoption stage which means that the uh government partner is procuring it using it operationally um or able to ingest it into their future operations. Um so again when you look at kind of the the the regular statistics from like a a VC model um these these are quite high.

Um so we try to balance taking risk while also being very mindful about the risk that we are taking. Yes. Go ahead. folks online know you're not that loud. Uh as someone who has worked with inel from a service perspective, I will say one of the key benefits for us in terms of identifying the uh best and breed tech and capabilities is that level of diligence where they are scouting and assessing and vetting over a thousand companies every year.

Uh and so to have access to that is huge and really helps us in terms of expediting that best and breed to the fleet. As a program manager, if you've ever done any type of contract action where you're looking at vetting all those that propose on a contract, they're doing a much deeper level analysis than we do in the government from what I've read. and they're doing it to protect, you know, and to make sure they're relatively successful in your investments. So, what I've seen and they've showed me, I'm quite impressed by how deep they go into their assessments of these startups, which is again, I don't think as a government, I've been a program manager for many, many years, that we do as deep of a job as they do. We tend to be a little bit more constrained in what we put out there in the bid.

So, I just want to say again, I think it's extremely valuable. Thank you, Captain Gibbons. And and one point when I clarify as a 51c3 when we make an investment the desire is not to have a return. We're not looking to invest in unicorns. I mean that it happens that's great.

Our focus is to create impact for our partners. We'll invest in a company that really maybe will never be more than just uh you know moderately successful but if it helps develop new capability for the war fighter that's what we're looking to do. This is a high level process uh how we generally operate. We'll we'll dive into that a little bit more deeper here in a second. Kate will take that portion of it.

But from a high level, here's here's the process we go through each year with our partners. The first thing that happens is that they submit over to the executive agent a problem set. Problem set is or whe it could be or set of technical gaps usually in the range of you know some submit hundreds others submit five to 10. We're looking for those kind of gamechanging areas that they need. They think commercial market can be able to help.

That sets the focus for our tech and investment team to go out there and begin exploring what companies are in those spaces. And now one thing we too is that throughout the process of submitting the problem set, we're going to have classified discussions with our government partners to make sure we really understand uh the problem. An analogy that Kate often hears me say is that it's like going to the doctor and trying to be diagnosed. We need to understand really what you've tried, what has worked, what hasn't worked. We want to make sure that what technology we're looking for is going to plug a hole.

We don't want to invest in a company that's going to be compliment is going to be in conflict with one of the things that you have developed. We want to make sure that we're plugging a gap and our approach we'll get to a little bit later is focus on architectures looking at a long-term plan about where we look want to build technologies together because one investment isn't going to solve all of your problems your technical gaps. going to take a series of investments over a period of time to to develop a holistic solution and we're going to try to work together and we'll get to that a little bit later. Um global exploration and diligence and what we well actually okay you're going to cover this in more depth so we can I'll bypass this one here. This is actually again another slide that loo looked good in theory but then now on a bigger screen doesn't uh small print but what it does is look at at our we break down technology into five technical practice areas advanced systems our bio biofocused uh practice called B- next cyber enterprise and intelligent connect connectivity compute what we refer to as IC2 we have tech staff and investment team across all these areas and the areas you see here listed are our areas of particular focus in FY25.

So we have SMEES attached to each one of these areas which is why we have a you know we have a broad group of national security partners across the IIC, DoD and DHS and we have uh the skill set to to match some of the challenges that they face uh on a routine basis. So this is kind of now these will change as our government problem sets change each year. So this is FY25. I imagine some of these will appear in FY26 and some maybe will will be different. you look at this list maybe 10 years ago, you're going to see probably a bigger focus on enterprise on uh big data when that was the thing all you heard about still I think still a challenge but it's that you know the focus now being geni and other areas there I'm going to turn over what you couldn't see because of the text is and and I'm looking at folks in the audience so I know a lot of these bendaras are everywhere the Navy and Marine Corps team are looking for capability which is Again, that's the overlap that I saw when I saw something.

I I looked down under there. I see GPS signal to die capabilities. They're getting after those capabilities. And I was a program manager trying to do the same exact thing. And I wasn't leveraging what you were leveraging.

I saw that as an efficient. I mean there's even capabilities and technologies in here I think to help out our shipyards which is very unique to say that but I mean I was like hey I was thinking space and I was thinking GPS and there's stuff in here that we could use not just AI and quantum but the potential of helping out some of our bigger issues would have to do with ship building. So again, I think this you're you're you're kind of underselling the broad spectrum of what you're looking at technical wise uh because I mean there's like I think I want to do bioharvesting or whatever. There's some really cool sounding stuff in there. I don't know what it means but I'm pretty sure we can use it.

Yeah, there's uh one of the the misnomers that has existed over recent time is that a lot of the if those who are familiar with Inkyel, it's a it's IC focused and our technology and our our partners across the whole national security gamut. These areas here have applicability across DUD, DHS and other locations and uh you know we've had recent successes with Navy and we're looking to kind of continue that that relationship there. I'm going to turn it over to Kate to cover kind of a little bit more in depth about the capability delivery. Awesome. Thanks Coley.

Um so Coley did a great job of outlining who we are and what we do. Um now I'm here to talk a little bit about how we actually do that. What does the process look like? Um when we outlined um Inutel um one of the biggest components of Inutel is this capabilities delivery. So um investing in companies um to tweak, modify, accelerate those companies in order to deliver capabilities to our government partners. Um so this is a little bit of a capabilities overview and then we'll take it step by step to really talk about what each of these components look like.

As Coley um talked about, you know, this first thing that we want to do is we want to understand our government partners' problems. It all starts there. We are a 501c3, which means that we are not motivated or driven by profit. We are investing to try to make sure that these investments generate impact for our partners. To be able to do that, we have to first meet with our partners to really understand what are your gaps, what are your technical gaps um based off of that.

So again, we work across over 14 different national security partners today. Um we ingest that and then we go out into the market and every single year, so year over year, we're talking to a thousand new companies. But the understanding the problems of our government partners is what directs us to which sort of industries, companies, technical focus areas that we're going out and we're speaking with. What we hope to ingest back or provide back to our government partners is based on the problems that they briefed to us overlaying what is currently going on in the commercial market or I would just say now the global market. Where are those opportunities that we can help get in early to then deliver capabilities to the government that they may not already be able to um to access.

Um I I believe Captain Gibbons said this, Coley said this, you know, we always say we are another tool in the toolbox. We are not the only tool but we are trying to provide our government partners access really to some of those budding areas in the commercial market that they can get in early enough influence the roadmap of some of these companies and the technologies so that as these companies continue to grow the government partners can be able to use these technologies for their use cases. Um so again that's strategy and thought leadership from there. Um when government partners say yes, this is something that I want to do, we start this predal process. Um this predal process is incredibly in-depth.

Um again, we've been doing this for 25 years, so we know what works well, what doesn't work well, where we've had to, you know, um dedicate more resources and less resources, but this pre-do process really covers those areas of diligence that Coley had shown on one of the previous slides. So looking at everything from the financial standing of the company to the leadership to the technical diligence um to the security vetting as well um making sure we understand where this company sits in the market. Um it's not always that we're doing investments in what you know we believe may be the bestin-class technology but it could be cheaper, smaller, quicker um novel. Um but making sure that we are clearly articulating that benefit and how it maps back to the problems that were bring to us once we do that pre-deal process. Um and this can take anywhere from um I would say you know two to three months to um you know to six months um depending um on uh one of our Navy work programs I can use it as an example I believe we received like the go-ahad or the signal that they wanted to do a work program in October and by January we had closed it.

So we can work very very fast. Um, but then we kick off the work program, and I'm going to go in depth about a work program a little bit further, but the work program is really this period that Coley talked about, typically 9 to 18 months, where we're customizing the technology, getting it into the hands of the war fighter, and then working to understand the customer's feedback, if this works for them, and if it does, how we can help them then have a direct relationship with the company or continue to grow that relationship in a way that um the customers um would like to. And we call that that final piece which is solution transfer. Um you know uh yes sir. So from a funding perspective the pre-deal process the investments ultimately the work program.

So um is the customer providing all that funding or do you pro the customers providing all that funding. Okay. Uh well well we're actually going to talk about that a little bit further on. um uh for a work program. Customers provide the funding for a work program.

Incutel's our proceeds to do what we call equity only investments which are investments that we believe can uh turn into work programs in the next maybe one to two years. Okay. So you do provide some of that funding on the we provide funding um we'll talk about this a little bit further on but we provide funding for equity only deals. Um but not for the work program deals work and stuff. Okay.

And then ultimately when a part when a customer wants to adopt a technology and field it um do they use their own contracts to do that and and then and then is does this process satisfy the uh competition contracts competition requirements to to go forward? Yeah. So those are all really great questions. Um, what I'm going to say is an answer that when you work across 14 different government partners and then within those departments and agencies, different teams and organizations have their own preferred method of doing things. And so on every single deal, work program deal that we do, we put a lot of grit and a lot of staff into that. And then we actually have on staff a government contracts expert as well.

At the end of the day, we want to after the the customer gets into their hands that technology and begins to evaluate it. We want to begin to have conversations with them about like you know what is your feedback? Is this something that you might want to ingest and if this is what is your preferred method of doing so so that we can a work with the company and b the government partner to find that right pathway. That pathway can look very very different. Um, one of the things we do after the conclusion of the work program is we have a full year of maintenance and support on contract with the company where the customer has the rights to continue to evaluate the technology and we are there as support to provide whatever resources we can. Our goal is not to stay in the middle of that relationship long term.

We want to do the work program to really provide that initial footing and then allow the customers and the company to go direct. um when we're going out and we're scouting all of these companies too. If a company already provides capability that could work for the government partner, we don't want to do a work program. We want to put them in, you know, direct communication and have that direct relationship. We only really want to do a work program when there's a little bit of a gap.

Maybe the company's too nent and um there's a need for that additional development of capability. Um, so I will briefly hit on this, but we're actually going to talk about it a little bit more when we talk about our investment philosophy. Um, but again, I mentioned every single year we talk to a thousand plus companies and these are not the same thousand companies year-over-year. So when you think about again our 25 26 years track record, we are talking to I mean every company out there, we are really talking to them. Um, and Coley talked about our insights, um, our situational awareness products, and we really developed that as a result of, um, as a result of how active we were in the market and the level of understanding that we were gaining about the global market.

From those thousand meeting notes, we dwindle that down into about 130 companies of interest. And these are um, something that we call koi documents. And these are companies that we believe we've kind of done that next level of diligence and we believe that they could be really interesting candidates for our work program on all of those koi documents. We actually map it back to the problem sets that our company or that our customers had initially delivered. From those kois we hold demos.

We do um uh diligence. We have um more technical in-depth discussion with our government partners. Um and then um as a result we do about 70 investments per year. 40 are equity only investments that we do out of inkl proceeds and 30 are strategic work program investments that we do to deliver capabilities. This is um a little bit of our pre-deal diligence process.

I'm reiterating myself but I'm just trying to kind of articulate again. It always starts with a problem set. It always starts with understanding what are the technical gaps um and then going out scouting the market and understanding what is happening in the commercial market where we can overlay that with the technical gaps. Um, one of the examples I like to talk about is um, uh, you know, historically um, some of our partners, if if you look at, you know, the mid200s, they were saying we need different sensors, cameras, payloads to integrate onto, um, aerial vehicles. And, um, when the autonomous cars um, market really started to take off, you saw a huge surge in startups of capabilities in sensors and cameras and all of those capabilities.

And we were able to go back to our government partners and say, "Hey, there's a ton of funding going on in the market right now in this area that you can take advantage of. Get in early. See if we can integrate these commercial capabilities onto drones, onto aerial vehicles, and leverage that." Um, deal scoping, deal selection, and scoping. That's kind of um when we get a little bit more in depth where a government partner says, "Yep, you know, we started with these 12 companies that address this problem. Um, I think these six have potential." And then we have discussions to maybe window it down to one or two or three candidates.

And then deal execution. Um that's again all of our technical, our financial, our security diligence. And every work program we do has a statement of work which is a contract between Inkel and the company um outlying specifically what the company will deliver on. This is an example of an InQel work program. The the bottom line that I really want to talk about here is um we are trying to identify a commercial capability still early enough in its development and through the inutel investment adapt that capability to meet the specific needs of the end user.

What this will do is it allows our government partners to evaluate and test that technology seeing if it can actually u meet its use case while continuing right to leverage um the private sector capital going into these startups. um within a month of kicking off the work programs um we deliver the existing commercial capability to our customers. So we want to move fast. We want to make sure that they're testing it early and then typically within 6 12 months we're delivering that first enhanced prototype for evaluation and testing um and looking to deliver the final enhanced prototype or final enhanced commercial product within 12 to 18 months. um the funding for a work program is going into the acceleration, the modification of the technology, receiving the services and deliverables.

But again, the Inutel model is that while the company is doing that, while they're creating and generating this, they're also attracting additional private sector capital um and continuing to innovate and iterate onto uh um onto that technology. And so this is important because we don't want the government to um you know, to to solely pay for the continued innovation of this technology. We want the commercial market to feel this. And so for every $1 that Inkl invests, on average, we attract an additional $40 of private sector capital. Um, and that continues on.

Um, so that again at the conclusion of the work program, um, our government partners, you know, while they may choose to go direct through a contract, they're able to continue to use that market and use the company as it's growing. as a program manager and someone that's sitting at RDA, if you told me I could take a dollar and get 40 extra dollars on the dollar that I invested that that that is an amazing return on that investment. So I mean I just think that's a tremendous piece of data that everyone needs to look at with possibility of using and huge. Yes, sir. start.

Thank you, Kevin. Um, so during the um work program process with a startup, for example, and you require from that company technical resources and support, do does part of that process put some of those folks through the clearance process? Is that required number one? And can you can you escalate that process? So that that is a great question. Um what I will say is that uh through through our model I would say for the majority we are we are trying not to have to support the clearances. We have uh the investment the board observer we have technical staff we have engineers and we have program manager. All of those intel staff are fully cleared.

So we go into our government um partners buildings often and frequently um to have those classified conversations and then to communicate to the startup the analogous um unclassed use case. With that being said, some companies need to have clearances in order to support the work program. And in that situation, the government partner can put in a request and we can work with the the the um agency to try to expedite that um to get them access. And then actually just my last point on this slide because again Captain Gibbons brought up a really good point. Um this is just the one to 40 ratio that's just inel to private sector investment.

Um with 14 different national security partners it is not uncommon to have multiple partners onto one work program. Right? So if it's a $2 million work program and there's four partners instead of one partner doing um you know um providing all $2 million it's $500,000 across those four partners. I recently pulled some data for another partner I work with. And in this last year, 60% of their deals were multi-partner deals. And for every $1 they invested, they were able to leverage um uh uh $2.60 of multi-partner um uh multi-partner funding.

Um and that's even before we factor in private sector capital. Um so I won't spend too much time on this slide, but this is the post deal diligence process. So we do all of that pre-deal diligence. We kick off the work program now what um it's uh good to follow the contract um but there's that current product and delivery and training we hold um I'd say every three to four months technical exchange meetings um design review meetings and this is all also based again every partner is different some partners want to be more involved throughout the course of the work program some partners may be deployed they may not have a lot of bandwidth and so we always have that meeting in the at the front end with the government partner about what does this look like for you what do you want this to look Um and then we really do focus significantly on solution transfer. That is the metric right that um we are evaluated on as a company by our board is you know how frequently are we getting these enhanced technologies into the hands of our government partners and are um the government partners using adopting ingesting this technology? Is it having mission impact? Great.

Um well now I will pass it back off to Coley to talk a little bit more about our investment approach. All right. Thank you, Kate. And the one Oh, yes sir, please. Just a quick question.

Do you have metrics on the impact or um you know, as you mentioned, right, the objectives that you're trying obviously not finan financial, but anything on that that you can share? We actually what I have two examples, sir, later we're going to highlight of two work programs and the impact that they had. um a metric that that really matters as a nonprofit if we're not looking for return. What is our metric? Our metric is adoption of technology. So that being procured postwork program or actually used operationally by one of the our government partners. Um our metric here we've had over 500 adop adoptions against our 800 investments over 25 years.

Uh so about roughly I think Kate mentioned 40 to 50% of our technologies are adopted by our government partners. about I think you mentioned about 70% are actually evaluated. So the enhanced capability that was developed during the course of that work program is used in an operation like environment to test it out. That's uh and then what we do quarterly is we uh brief our board of trustees as well as our executive staff. Acts one of our Navy work programs is coming up uh to brief in in March uh to give it a qualitative example of like what it did uh for their mission.

And I um I also just want to make sure that I add there into that like adoption rate. I honestly view that, you know, it'd be great if we had 100% adoption rate. That in that case though, we probably would not be taking enough risk, right? Like we're we're doing this model. We're working with startups because we we want to take risk in a safe way, in a way that we're being very um uh you know, very mindful and explicit about the risk that we are taking. Um but there does need to be a degree of risk.

And the other thing I want to add is sometimes mission impact is not always the government customer adopting the technology. Sometimes it's them learning that this technology does not work for me but this technology does or I don't want the version three of this I want the version 10 and so I need to establish XYZ with the company to be able to continue to work with them as they develop it. So um that's something again why we really try to make sure that we are communicating very frequently with our partners um to understand what are you trying to obtain out of this work program. But a lot of times some of that mission impact is really coming from the learnings and the interaction that they're having with the company and the company's technical staff as well. The um element here that I think is important to highlight as a on the post diligence side is that all of our government partners have a day job.

their day job is not to manage a startup company and making sure it delivers against the contract and that they are well prepared. One thing we try to make it a light lift for our government partners by having a team of four to manage each and every work program we have. So we have about I think a president this may be wrong but in the ballpark about 150 active work programs right going on right now and we so we tried as as Kate showed in that the post diligence slide is that we want to make sure that we make it a light lift. So, you know, you guys are out there doing your doing your job. We're going to kind of chime in and say, "Hey, we we could use your your point of view here on this one piece here.

We want to bring make the work for them on a work program minimal because you have other things to do right now and it's not to to obsess over this over this one work program. That's our responsibility to do dedicated time and resources. So, one element there we have as a project engineer. So before any hardware software is delivered over to you for evaluation, they're going to validate against the contract that it meets the requirements and that they may notice any other red flags before it gets over to you. So the idea is when it lands on your desk or in your hands, there's a good chance it's going to work pretty quickly and be deployed successfully.

We want to make that work a light for you. On the investment side, um this is our general approach. So we routinely we always co-invest with other VCs. We want to leverage of our private sector capital to benefit our our government partners. Plus, it also displays and demonstrates that that technology has a commercial uh roadmap to for for success.

We're non-controlling investors. We take a very a minority position in the company. Uh usually we take the exercise in the form of a warrant with most of our companies. We do take a board observer in our investments for startup companies. Um we take that role very seriously.

I'm not uh one of our ITMs, but I can speak working with them for years. They really want to help these startup companies, you know, reach their their goals commercially to be successful and we're going to try to make them introductions to other VCs or provide them guidance in their experience about how to, you know, build build successfully a young company. Uh we've kind of heard before we invest globally. So, we invest in both US and non US-based companies. You can see there there are two type of investment types.

Uh one is the equity investment we mentioned earlier. We kind of refer to it in the inel as an EO. Um those come out of IQT proceeds as a 501c3 non forprofit. When a company does IPO or does get acquired and there's return on that investment as a 501c3 that money is recycled back into the model. One of which way we do that is when we created equity investments.

This was to look at companies that are young, early stage that are not ready to support a work program with a government partner but really have a really promising opportunity to do so. We want to help them along the way. So these uh what we also used to refer to as seed investments helps us monitor the company and help them out where we can and get them in a position potentially to convert to a work program. Work programs you've seen the range there up to $3 million on average to do a work program. usually multi-artner focused to as Kate mentioned to leverage other government dollars out outside of the private sector but to leverage other people in the national security community because this won't shock anybody in this room right now there's a lot of overlap on technical priorities they may be set a little bit differently but largely they are looking for the same thing so if we can get whether it's CIA NSA uh one of the combatant commands Navy to work together on a work program to drive down cost of that investment.

So if you you put in $500,000 into a work program, the work program 3 million, you're getting the benefit of that other $2.5 million of other government uh dollars for you get access to all the technology that they're they're enhancing. We kind of covered a little bit this this already, so I'll kind of I'll kind of skip this this one slide here. The investment facts and figures again, um I'll kind of read it to some of the smaller print. We've made close to 800 investments since our founding in 1999. And I'd say we've kind of come to a steady state here over the last five years of where we roughly invest about between 70 and 75 investments a year, which looks like if you break that down about 30 work program investments and about 40 to 45 equity only investments each year.

Uh we partner with over 3,000 co-investors. So we have a broad a broad network of groups that we other VCs that we work with. Um, and then this also we've also made investments across more than 35 states and they're nearly at 20 countries at this point. Um, so it's a big part of the models to make sure that we're not just focused here domestically, but we're looking across the globe to see what else may may be out there. Um, let's see here.

I can go here. We'll go over to two work program examples. And now I'm going to prep uh give a little bit of introduction here because she's done a wonderful job leading these investments. Nom has been very supportive on both work programs and again when we say this earlier a work program is between inutel and the company. So we engage in a contract with the company on behalf of the government to enhance the capability and provide it over to uh whether it's the analyst or the war fighter to use to evaluate provide feedback to through the through the work program and hopefully to adopt the technology for operational use and to create impact and that's where we IQT gets to seize the value when we get to hear how this technology save lives time and money that's what energizes our organization which is mission focused on seeing ways we can do that.

And um these are two examples in real time that we've recently done with Navy within about a year of created some level of impact. We hope it continues to grow and I'll turn over to Kate to cover these. Awesome. Um so we've talked a lot and we've said a lot of words. This is actually now to show the picture of like what does this actually look like? What has this looked like with the Navy so far? Um so I'm going to highlight two examples here and again you know huge credit to Nome AB and and his team um for the work that they've put in to help us partner on these two work programs.

Um the first is a company that's called so far ocean. Um and the challenge that we had received from our government partners was the need to provide near realtime seaate data. Um so far has a lowcost spotter buoy that is a real-time maritime platform. Um and so uh you know back in July 2022 um Inutel made an equity only investment so it's making an investment with Inkel proceeds into the company because we thought it was really interesting and had a couple key market differentiators. One being that it was 10 times lower cost than competitors.

Another that it was scalable for global deploy deployment. They had 3,000 buoys worldwide providing over a 100,000 data points per day. Um and then it had modular hardware design using open source standards. Um so we did this equity only investment to maintain connectivity to the company to better understand what was on their commercial roadmap see how they developed and then about a year and a half later so in December 2023 um we did a work program investment on behalf of a Navy customer and what this work program investment was focused on was one um uh going to actually collect sub um subsurface data. So it's collecting surface data but now we want to collect subsurface.

Um adding a quick deploy and retrieve adding data visual visualization and then um integrating additional data sets. Um and so uh uh we closed this in late December 2023. I remember this because it was like right before Christmas and then early February we held the work program kickoff where within uh shortly after a month we actually went down to Virginia Beach. We delivered the current so far system. These images on the right are actual images from um this event and exercise.

Incitel was there, the company was there, we were there hands-in with the customer. Um and they were testing these out and providing real-time feedback about like you know you have all these great instructions. I want IKEA level instructions where it's like an image. Um like this box is uh way too complicated when it's going to be the middle of the night and I'm throwing this overseas. Can we actually make this box into something that is part of the buoy? Um and so in addition to all of these enhancements that the work program was focused on, the company was able to take that feedback, modify it, and then um within six months of the kickoff, they delivered the first enhanced product that contained the first baked wave of these enhancements as well as additional feedback that the customers were able to go out and utilize.

Um you know what what this is a great example of is startups are awesome to work with because they work super quick. um Inql provides a little bit of a structure to that to help guide the customers and the companies again to be able to do this in a quick efficient manner. Um so that's the first example and then the second example um is a company called Anel Phetonics. Um Anel is actually here today and they are at booth uh 433. Um but Anela Anella makes a silicon photonix fiber optical gyroscope.

Um and so uh obviously the use case here or the challenge here was um operating in GPS denied environments. I I I know that is a global challenge. Coley talked about how problems are are never really unique sometimes to our our individual partners. This is one that several partners have struggled with. Um Anella was founded in 2018.

Um we uh had a relationship with the CEO. He was a longtime Intel fellow. Um and so when the company was stood up, we knew that this was going to be something interesting. Um and by uh January 2020, we made our first um equity only or strategic investment into the company again to track what they were doing. um you know some market differentiators that we found with Enelo and what was on their road map was a the use of silicon phatonics for the gyro.

B um the the fact that it was 10 times smaller and four to 10 times cheaper than competing technologies and sat at a very interesting market um uh very interesting segment within the market that had not yet really been exploited in that middle market area. Um, so when you're, you know, crashing drones, when the drone may not come back, um, you don't necessarily want to put a very high-grade, um, uh, inertial capability on it. Um, so we did one equity investment and then we actually did a follow-on equity investment because the company and the customers were not ready to embark on a work program, but we saw a lot of value in engaging with this um, with this company. And then um, in September 22, we closed our first work program investment um, which was about a $3 million investment on behalf of another government partner. and it was taking their ground capability and accelerating the development to put it into this little tiny cube on the top right hand corner.

Um, and then uh in January 2024, that's when we did a follow-on work program investment for a Navy customer. In this case, it was task force 59. So, we closed the deal in January 2024. By August 2024, we were actually demoing the enhanced capability at the Blue Tides event. So, a Navy event up in Rhode Island.

And then by November 2024, we got the final product into the hands of the customer to actually test and evaluate. You know, they tested this um uh in Bahrain and three days later actually used this in operational um scenarios off the coast of Aabus. So again, this can really show the ability for us to work incredibly quickly with our Navy partners um leverage multiple lines of different costs from the equity and only investments to co-partnering on work program investments um uh to deliver capabilities. So um and then I'm just going to check time real quick. Uh great.

So um we'll end with these slides. This was something we alluded to in the beginning that you know we take an architectural approach. So, we look to have long-term partnerships, you know, with our government partners. Um, a lot of times, this is just one example where our government partners will say, well, we need AI, we need to use AI. Um, but this is, you know, how this is an example of when we take in the problems, we go out into the market, we find that overlap and say, okay, this is where we think is the market for AI that we can help you all with.

We have slides then that actually populate all of our portfolio companies into these different areas to show where we've currently invested as well as the pipeline companies that we're looking at or have equity only investments in. And then um these are just two examples of you know um you know uh uh potential work programs that we've worked with customers on um you know interesting technology areas and I think very relevant to uh the current environment we live in today. Oxide's an example of a um high performance computing infrastructure for on premise data centers. Um so providing a cloud-like server solution vendor agnostic open software um stack but this provides resiliency security and um uh scalability for on-prem environments for our government customers. Um so again uh this company is early on so we've talked about you know what are additional work program enhancements that our government partners would need to actually be able to ingest and use this.

And then um Armada is another example. This is a really interesting one where they deliver modular data centers and edge device management um for remote environments. So quite applicable to our government partners. Um the impact there that we'd be looking at is providing AI powered analytics and predictive tools um or operational efficiency in remote locations. Um and I just want to uh conclude kind of with one more uh plug where we I know we do have a couple different Inky portfolio companies here today in addition to Enelo.

So, um, Hidden Level is, uh, an equity only investment that we have. Um, they're actually doing a demo this afternoon. They're a counter UAS company. Um, and then, uh, Second Front is an active investment that we have. Um, they are a cyber security company.

Um, and they are also here today, I believe, also doing a demo this afternoon. Um, there's probably way more portfolio companies here that I'm just not mentioning. So, um, uh, if you are a Port Co, um, please introduce yourself. Show us one more slide here. I want go this this one here really quickly here.

It's kind of putting a kind of a bow on our our our talk this morning. It's been like this kind of holistically looks at when when you partner with this is the things the products and services that you're getting when you work with us. And it be it begins each year as we kind of discussed understanding what the problems are you have sitting with you in your spaces working closely with you. This is not a situation where IQT invests in a company and you kind of throw the technology over the wall and say well good luck and hope hope it works out for you. This is a an experience where you're working very handinhand with us throughout the process of it.

Learning what you're trying to achieve. What are your technical gaps that you have? Then talking through potential solutions in your spaces with you and seeing like what would be the potentially the best fit for you and as a very agnostic to the company. We're looking for solutions. Not looking at this company. We're trying to cram that into a problem.

Looking to see what's out there we can help solve. Not just that we make an investment, you're also receiving a fair amount of whether it's technology, awareness products, insights products that hopefully to get that information, we also give you an advantage in in your mission, not just a new capability that we're working to develop with you. And again, we're here for the the long haul. We're not looking to make a quick investment and say we're going to try to tell you our team and we've witnessed it before where they'll tell our partner like, "Hey, we're looking for this and like this this company is not it. this is really, you know, this is what we think really would be best for you.

Uh, so we're going to be an honest broker and working with you and hopefully you'd expand our partnership uh with the Navy. So for other questions or on Okay. Uh, so I just want to highlight a couple things, amplify a few things. So you saw two of the work programs for the Navy. When you consider the timelines on that from the moment we had an SO and the work program established in one case product in the hands of the war fighter inside of 7 to 8 months in the other and that capability has already been out to theater in the other case it was product in the hands of the war fighter for experimentation and assessment to do exactly what Kate highlighted earlier which is assess if the performance meets the needs.

So it's not a done deal for the war fighter. It really just facilitates and expedites that capability assessment for the war fighter. One that has not been a work program but I do want to highlight is our motto was touched on. Our motto was introduced to the navy through inutel. We have pursued a cooperative research agree uh research and development agreement or a crater in order to pursue that on behalf of the fleet.

So introduced to us as another capability and in that case a capability that directly speaks to the CNO's project 33 in terms of fighting from the mock. So it's been a great partnership for us. We're looking to expand it as Captain Gibbons highlighted to to really broaden the aperture for this partnership across the entire Navy enterprise. Any other questions? So, hey, you know, I love it no project 33. So, sitting in the building of the Pentagon for the first time in my 31-year career, it's real exciting.

Um, when you're in the Pentagon and you're listening to the CNO, you're listening to the Secretary of the Navy talk about the fact that we've got to be ready the 2027 time frame. And I look at concept like EQoutel as a died in the wool freaking acquisition guy that has been doing it for 27 years from shipyards to space every single platform. This is hard for program managers to understand to be very blunt because we were not trained this way to consider venture capital to consider developing with commercial entities you know and and leaving a lot of the trust into a firm like inel. But what really struck me as amazing was when they told me that 32 of your work programs today are being used by the IC in Ukraine. I guarantee you in this room and in the naval service that we could use probably 75% of those capabilities and we don't have access to them until we get more in line with INQEL until I do more work in RDA to make sure that we open up this aperture to the acquisition establishment and one of the issues I find as a concern is that how many an LO capabil how many of those boxes were built for for GPS? Do you know how many? Oh, the um the you were there.

No, we we have a Dr. We have a TPS capability out there right now that's being leveraged by the fleet because they can't wait and they're finding ways to get the capability. And man, do I applaud them because acquisition is the resource sponsor, the acquisition or whomever are not fast enough by allowing us to have this access to Inqutel. What I also have a visualization over a strategy of is we have program managers that can get after the capabilities that they're talking about here team with them properly and most importantly home those products back to a program office right because what I don't like to see is a lot of these great capabilities put out into the fleet being used by the fleet being dependent upon by the war fighter but then what happens one two three years down the road they've got to go somewhere Right. So again there's a lot of benefits here because like they said they don't walk away but at the same time what we see the value in this I work a lot with them is the fact that we get access to inutel and this teaming that the CIA has created the intel community then we are the IC then we can actually have another tool in the toolkit for our PMs.

So again we have life cycle sustainment for these capabilities as well and we continue to build on it. So um again I be I'm the pitch man again. I keep saying it this way because this is a different way of thinking that I have not been trained to think like for the last again 26 27 years in in hardcore acquisition and I think this is what we need because again we have a short amount of time time remaining for us to be prepared and we and we got to get after thinking this way as well on top of everything else we do. So um any other questions for anybody here? Mr. you.

So, I've been working at S&T for quite some years and um venture capital is unfortunately looked down upon by the SBA and such. In fact, sometimes they call it the vulture capital list and uh we've seen VCs do a lots of bad things. So, I'll just leave it at that. But inel seems very different. What are you doing in terms of policy to fix this perception that the Small Business Administration have of VCs and as you know SBIS and such if you check that the VC box that makes it somewhat difficult to award contracts to you? I I can take a stab at this and then I can pass it off to Coley.

Um I think one thing to clarify is while we have almost a venture capital model taking equity investments into companies, we are not a venture capital firm. We are a strategic investor and we are a 501c3 and we were stood up 25 years ago with that intention for the exact reason that if you're going out and you're investing to make return on investments in these companies, how you perceive what you're going to do for investments, you're going to have a different lens. Our investment philosophy is again what is mission impact and that can go back to best-in-class technology, cheaper, smaller, what that is, but that is how we're evaluated at the end of the day. Um, and that is what drives our investment philosophy. And so while we partner with other venture capital firms to leverage capital, we have that model that allows us to take the equity stakes, we are not a venture capital firm at the end of the day.

We're a strategic investor on behalf of the US government. And that's well said, Kate. And there a couple examples of which where um as long as a company we feel is going to financially exist and be able to deliver a capability to our government partner we will proceed uh with an investment in that company is if they you know the government says this is going to have significant impact to their mission. I can think of multiple examples uh where the company itself is you know doing fine financially. Uh so our focus is to say hey this is gonna this is what it could do for us and it's presented to our leadership and they like let's do it and that's really what it comes down to.

If we look back our board is and our leadership is not assessing us based on how our companies did. They're assessing us against how we're doing for our government partners. Now we want our companies you know to be su successful. That's how we attract some tier one startups. At the end of the day, it comes focused on the mission and um I encourage anyone here if you're in Tyson's uh to to to give us a call or come by and stop by.

But you get the sense of when you in our building all the mission the focus is looking how can we find new ways over our models have even evolved to build to your question also is when we first started we made I don't want to say quote this but you know nine to 10 investments maybe a year and that was the core of it. You know, fast forward 25 years, we're making over 70 a year. We've opened up an insights product line, equity only investments. At one point, we had IQT labs, which was about four independent groups of people doing work to do now it's now modified to do rapid prototyping. So, even when we do turn a proceed from one of those investments, we're finding ways that could benefit the government mission.

And like what does that look like? It's changed. You know, at one point we had a big data lab, but now we've now knew a rapid prototyping group is focused on taking open source technologies and delivering a prototyped here in you know three months. So that's how we can help the government is going to be constantly changing investor on behalf of the United States government. That's what you do. I love it.

That's a better way of saying it. So thanks for that. Um sorry question from ventures. Um obviously when we invest in a company it cannot be because they are a government focused organization particularly defense right. So I see this program mainly as maybe helping the customer to get additional funding.

Many of our company we have 70 active investment. many of our company got f works and it's very popular this uh you know I have lost track with intel so it looks to me that if we have navy customer we have some companies customer may uh but a lot of time they focus on war fighting right mission they don't want to do R&D [Music] and how would to introduce the work program to a navy program office focus. They their money is in O and not RDTn and say hey this work program could help them accelerate deployment or add new capability. I I would like to know how I can introduce this to our portfolio companies and their customers. Yeah.

So, um I'll take a stab at it and then pass to Coley for any additional comments. Um but going back to one of our earlier slides, it all again it starts with the problem sets. Um so any uh government customer, they put funding on contract each year, right? So, a designated amount of funding and then they deliver to us their problem sets and we use that to go out and to find the companies and to say, "Hey, company A, B, and C address this GPS denied, you know, problem that you identified." And then they would say, "Hm, yeah, like I'm I'm interested in potentially engaging with these, you know, one or two companies." So it's coming the problems that they're it starts with the designated amount of funding then the identification of the problems and then based on the identification of the problems that's what we're going back to them with to say these are companies that exist that are out there that may address the problems you deliver to us to engage in a work program with sir I'm sorry I came in here late which organization you're withdr or Great to have a landing. Yeah, there's that's one thing here too is that and I want to be cognizant of the people behind us, but you know we're in in the in the area of ready soon technology. So it's not like when we engage with a company, you know, while we try to incubate companies that that are equity only investments that we make in companies.

So there's nonwork program focused, but the ones that are work program focused, they have a prototype and or a commercial product that is already available. We're talking to make enhancements to it. We're taking two or three different areas, whether we want to change the size of it, we want to focus on a different power element to it that we can hopefully accelerate development in six months to have something in your hands for operations. So there's al sometimes misconception that we're basically beginning from scratch and building a product from that will take two or three four years to develop. It's more of in the range of six to 12 months where you're going to have something depending on what the technology is.

So there's a range there uh that they can move pretty quickly against. Awesome. Well, I don't want to take um we don't want to cut into the next presentation. So thank you all um so much for your time today. Thank you guys.

You guys are fantastic. Appreciate that so much.