WASHINGTON– Today, the U.S. Small Business Administration (SBA) and the U.S. Department of Defense (DoD) announced that on Friday, March 10, they intend to sign a historic Memorandum of Agreement at the South by Southwest (SXSW) festival in Austin, Texas. This agreement establishes the framework for DoD’s newly established Office of Strategic Capital (OSC) and the SBA’s Office of Investment and Innovation (OII) partnership on the Small Business Investment Company Critical Technologies (SBICCT) Initiative, a public-private investment partnership initiative designed to accelerate and scale private investment and DoD support for innovative technologies critical to U.S. national security.
The signing of this agreement on Friday will formalize the joint initiative SBA Administrator Guzman and Defense Secretary Austin announced in December 2022 to support the Biden-Harris Administration’s whole-of-government strategy to bolster America’s leadership in global innovation and to strengthen our national security.
“Throughout its 65-year-long history, the SBA’s Small Business Investment Company (SBIC) program has seeded and scaled some of the most innovative and successful businesses in the world. From semiconductors to personal computers to electronic vehicles, public-private SBIC partnerships have sparked the growth of new industries by growing startups and sustained small businesses fulfilling critical needs in our domestic supply chain and communities around the country. This agreement represents a natural extension of our longstanding partnership with the Department of Defense and a commitment by both of our agencies to be intentional in our efforts to commit capital and resources to private funds aligned to America’s national security mission,” said Bailey DeVries, Associate Administrator of the SBA’s Office of Investment and Innovation.
“The partnership with the SBA has been fantastic; we’ve been able to bring back the SBIC program for national security to make investment opportunities in early-stage technology companies and capital-intensive small businesses addressing today’s most pressing national security supply chain needs,” said OSC Director Dr. Jason Rathje. “By licensing new limited partnerships vertically focused on deep technology areas, we can leverage new investment funds to provide patient sources of capital for these critical technologies.”
Enabling this partnership are reforms that SBA has proposed to modernize the SBIC program and introduce a new financial instrument called the Accrual Debenture. The Accrual Debenture was developed to address patient capital gaps like those frequently seen in capital-intensive technology sectors critical to national security. Many defense-related innovations require heavy research and development investment and capital expenditure early in the life of a business, and this instrument is aligned to the long duration of private funds committing capital portfolio companies developing such innovations.
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow, or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. Learn more at sba.gov.