How Spin-In Works for Defense Contractors
- Most deals would involve commercial start-ups where aerospace/defense could be an “add-on” market
- Primary deal flow occurs where Defense Contractor acts as a “channel partner,” not an acquirer
- Generally no investment required; in some cases, minority investment to solidify exclusivity might be desirable
- Defense Contractor earns revenues and profit as a prime to take the innovation into aerospace/defense customers, leveraging Defense Contractor’s understanding of government contracting and contacts with decision makers in government and other defense primes
- Partner companies would continue as separate entities pursuing their main markets in commercial arena
- TechSpin serves as a “broker” to help identify and realize opportunities
- Defense Contractor articulates unmet needs
- TechSpin mines contacts in commercial world to surface opportunities
- TechSpin negotiates on behalf of, and is paid by, the technology seller
- New companies with a pure defense focus would likely not be part of this deal flow, since venture capitalists tend not to invest in that market
