Pentagon ‘Matchmakers’ Aim to Keep U.S. Tech Firms from Taking Chinese Money

The Pentagon is creating a matchmaking service to steer vetted venture capitalists toward small firms developing potentially valuable military technologies.

It’s the Defense Department’s latest effort to block Chinese investment in such firms, and to deny Beijing access to tech that might give the U.S. military an edge. Dubbed the Trusted Capital Marketplace, the new program will launch in coming weeks, Ellen Lord, defense undersecretary for acquisition and sustainment, told reporters on Friday.

Lord said her department has a list of “at least 50” such tech companies, as compiled during a White House-directed assessment of the defense industrial base, and she believes there “many more” out there.

“A lot of these companies are small, innovative companies, that frankly don’t either have the resources or the sophistication, in terms of the contacts, to reach sources of capital,” she said at a Pentagon press briefing. “What we’re trying to do is enable that so that they don’t have to frankly go through a lot of time and expense with legal firms to try to ferret out who is out there.

“Likewise, we have some incredible patriots that have come to us and said, ‘we’re interested in putting our money somewhere that will make a difference in our national defense,’” she continued. “There are two willing...sides there and frankly, I think there’s an unmet need that somebody like government can provide the sort of echo system to make it work.”

Lord said officials expect to develop investment goals for the program in the coming month.

“The first step is to set up a website infrastructure to bring providers of trusted capital together with business looking for capital infusions,” she said.

The fiscal 2018 National Defense Authorization Act directed the Pentagon to create a pilot program “that supports small and medium-sized companies to manufacture ‘emerging defense and commercial technologies,’” Lord said.

In October 2018, Pentagon officials said they would invest in domestic manufacturing to reduce its over-reliance on Chinese and other foreign-made parts in American weapons. The following month, Commerce officials released a list of “specific emerging technologies that are essential to the national security of the United States,” including nanobiology; position, navigation, and timing; additive manufacturing; micro-drone and micro-robotic systems; swarming technology; hypersonics and faceprint and voiceprint technologies.