Army Turns Venture Capital Into a Faster Tech Pipeline

Army FUZE directs about $750 million a year toward technology programs designed to put capabilities in soldiers’ hands. It borrows venture-capital methods to decide which advances move forward and which get cut. The program makes smaller investments, scales efforts that work and ends those that don’t. Its goal is military use, not financial returns.

Who Sets the Priorities

Dr. Matt Willis, Director of Army FUZE, said Hon. Dan Driscoll established the program about a year ago, while serving as Secretary of the Army. Driscoll’s stated purpose was to create a more deliberate and agile acquisition and innovation program, and to take more risk. The money goes to several programs, most of them focused on maturing prototypes.

Willis described the difference from a conventional venture fund this way: Army FUZE seeks “technical returns rather than financial returns.” The measure is whether technology can meet Army needs, not whether an investment turns a profit. Commanders set priorities, acquisition offices manage the pipeline, and soldiers test equipment intended for their use.

Army FUZE brings together programs that once had separate application processes and entry points. Its xTech program aims to make government work easier for new businesses, with a simpler application and non-dilutive cash prizes that can offset participation costs at exercises. The Army also shifted its Small Business Innovation Research/Small Business Technology Transfer program toward prototype development. SBIR awards typically top out at around $2 million, though new flexibilities allow larger awards.

The Procurement Apparatus, Streamlined

The portfolio includes a Technology Maturation Initiative for larger prototyping awards and a Manufacturing Technology program focused on supply chains, manufacturability and cost-conscious development. Companies compete through different channels in the same Army-directed system, building technology the institution may choose to adopt.

Army FUZE provides capital and acquisition program management to the Army Pathway for Innovation and Technology, or Army PIT, which stood up about 10 months before the interview. Army PIT connects that work to four deployed acquisition officers at the ASCCs, including U.S. Army Europe-Africa and U.S. Army Pacific, and at the tactical level at 18th Airborne Corps, I Corps and III Corps. Willis said this arrangement brings technical priorities directly from commanders.

The Army has also cut down the application process. Most calls for proposals now run two to five pages, rather than 50-page manuscripts. Applicants face less paperwork, but the Army still decides which proposals receive funding and move forward.

Soldiers as Testers, Companies as Suppliers

Willis said soldier feedback runs throughout the Army FUZE lifecycle. Operational assessments put equipment in soldiers’ hands, sometimes with the vendor present. Soldiers’ feedback goes to the vendor, which can use it to improve the technology, interface or use. Early testing helps identify whether capabilities work as advertised and gives companies a chance to adapt.

Willis said a 100% transition rate would mean the Army wasn’t taking enough risks or pushing at the edge of technology. Companies that can adapt their technology, integrate it with other capabilities and support plug-and-play or layered solutions fit Army needs better than those operating as closed systems.

He pointed to Operation Jailbreak, which began with a specific problem faced by forward-deployed soldiers. The secretary at the time called for a capability in theater in 10 days. Army FUZE and Army PIT issued a solicitation, heard pitches, selected companies and put them under contract within 128 hours. They tested the capabilities at Aberdeen Proving Ground, then deployed them to CENTCOM.

Army FUZE and Army PIT sit within the acquisition enterprise, the Office of the Army Acquisition Executive. They work with portfolio acquisition executives and capability portfolio executives to scale promising technologies. Willis said the FUZE capital integration team has also built partnerships with domestic and international venture-capital and private-capital firms, aiming to help companies in its ecosystem access cheaper capital and combine Army and private investment. The pipeline moves faster. The institution still decides what counts as a capability and where it goes.