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