The Rise of Dual-Use Ventures: Redefining Military Innovation in the Age of Disruption

Military innovation no longer begins in government laboratories. It often starts in small, fast-moving companies building technologies for civilian use. These companies, known as dual-use ventures, create tools that may serve both markets and militaries. Their rise marks a major shift, blending private capital, commercial design, and national security in an unstable global environment.

Defining Dual-Use Ventures

Dual-use ventures are startups that build technologies with both civilian and military applications. Many of these tools begin by solving problems in logistics, energy, communication, or healthcare. Over time, the same technologies may be useful for defense because of their efficiency, accuracy, or adaptability. Common examples include:

• Artificial intelligence
• Autonomous drones and vehicles
• Quantum computers
• Satellite and space systems
• Advanced robotics
• Biotechnology and materials science

The name “dual-use” reflects the ability of one product or system to operate across both public and defense domains.

From Top-Down to Bottom-Up Innovation

Historically, defense technology was created through large government-led projects. These processes were often slow, expensive, and limited to military use. In today’s landscape, innovation often flows from civilian startups. Commercial inventions developed for health or industry may later be adapted for national defense. This bottom-up shift favors flexibility and speed over bureaucracy.

How Dual-Use Ventures Work

These ventures usually begin in the private sector, funded by investors to solve real-world problems. If successful, they may attract interest from defense agencies. At that stage, they may apply for research grants, run pilot programs, or enter special government partnerships. Their success depends on balancing:

• Business speed with security protocols
• Profit models with public mission goals
• Commercial freedom with military restrictions

Most are founded by engineers, scientists, former military members, or technical experts with strong civic values.

The Role of Strategic Investment

Private investors now play a key role in national security. Some specialize in technologies that align with defense needs. These investors often have links to military, government, or intelligence communities. Their support includes:

• Early-stage funding
• Business guidance
• Legal and ethical advice
• Introductions to government programs

Examples include Shield Capital, Lux Capital, In-Q-Tel (a nonprofit investor supporting U.S. intelligence), and American Dynamism funds. They focus on technologies with long-term impact, not just profit.

Government Programs Supporting Startups

Traditional defense acquisition is often too slow for startups. To improve this, agencies have created new entry points. These include:

• Defense Innovation Unit (DIU): connects commercial startups with military needs
• AFWERX and NavalX: innovation offices for the Air Force and Navy
• National Security Innovation Network (NSIN): helps new companies test and scale ideas
• National Security Innovation Capital (NSIC): provides financial support for hardware startups

These programs often offer non-dilutive grants, which means the government gives funding without taking ownership of the company.

Accelerators and Public-Private Bridges

Some startups need help entering the defense world. Civil-military accelerators are programs that train founders to work with government and national security. Examples include:

• FedTech
• NSIN Foundry
• H4XLabs

These programs help startups understand military problems, prepare for government sales, and build systems that follow export and safety rules.

Operational and Ethical Challenges

Despite their promise, dual-use ventures face several difficulties:

• Startups move fast, but government buying processes are slow
• Military contracts may take years to complete
• Rules about export controls (laws that limit what may be sold to other countries) are complex
• Some technologies raise ethical concerns, like autonomous weapons or surveillance tools
• Founders may feel conflicted about how their work is used

This period of risk is often called the “valley of death”, where good technologies fail to scale due to funding gaps or bureaucracy.

Strategic Competition with Authoritarian Models

In countries like China, the government controls both civilian and military innovation through a system called civil-military fusion. This central model allows quick coordination but reduces openness. In contrast, the United States uses a decentralized model where private companies lead, and government supports.

This difference affects:

• Innovation speed and resilience
• National control over key technologies
• How quickly ideas move from lab to field
• How openly companies may grow across borders

As global tension increases, the U.S. has strengthened foreign investment reviews and export policies to protect sensitive technologies.

Fragmentation and Coordination Gaps

Even with new programs, the U.S. innovation ecosystem remains scattered. Challenges include:

• Different departments funding the same ideas
• No unified national innovation strategy
• Startup timelines not aligned with military budgets
• Lack of clear paths from prototype to widespread adoption

Improving coordination across agencies may be key to long-term success.

The Founder Identity and New Subculture

Dual-use founders often blend business goals with civic values. They are not traditional contractors and often avoid heavy bureaucracy. Their worldview includes:

• National service without political partisanship
• Openness to global markets and ethical concerns
• Reluctance to contribute to unchecked surveillance or warfare
• Desire for scalable, responsible impact

This group represents a new generation of strategic technologists working at the edge of power, technology, and public duty.

Governance Improvements for the Future

To unlock the full value of dual-use ventures, some adjustments may help:

• Expand non-dilutive early funding for startups
• Create simple, well-defined paths from pilot to adoption
• Align investor incentives with long-term public goals
• Reduce duplication across departments
• Add fast, lightweight ethical guidance tools for emerging tech

These steps may allow innovation to grow without losing alignment with national priorities.

Conclusion

Dual-use ventures are reshaping how nations build military strength. By merging fast, market-driven invention with public mission, they may offer a powerful edge in global competition. Building strong systems for coordination, accountability, and ethical use may define how this model shapes security, innovation, and strategy in the years ahead.

Dual-Use Ventures: Strategic Legal Considerations for Business Success

Dual-use ventures are businesses that develop products or services serving both civilian and military purposes. These companies often receive government funding for research and development (R&D) projects. Understanding the legal and regulatory aspects of dual-use ventures is crucial for compliance and success in both commercial and government markets.

Small Business Innovation Research (SBIR) Program

The SBIR program provides funding to small businesses engaged in innovative technology development. To qualify:

• Ownership Requirement: The business must be at least 50% owned by U.S. citizens or qualifying entities.
• Venture Capital Investment: If venture capital (VC) firms are involved, the business may still be eligible, but the VC must be over 50% owned and controlled by U.S. individuals. Certain restrictions apply, particularly if the business is owned by multiple venture capital operating companies (VCOCs), hedge funds, or private equity firms.

Intellectual Property (IP) and Government Data Rights

Managing IP rights is vital, especially when government contracts are involved. Government data rights define how technical data and software are used by the government and how IP is protected in these contracts.

• Government Data Rights: These are similar to non-disclosure agreements (NDAs) with the government, outlining restrictions on the use, disclosure, and sharing of data.
• SBIR Data Rights: Specifically for data developed under SBIR contracts, these rights grant the government limited use of technical data or software for a period of 20 years. After 20 years, the government gains broader rights to the data.

Subcontracts and Integration of Technology

In government contracts, subcontracts are common, especially when small businesses collaborate with larger prime contractors. Properly structuring subcontracts and understanding IP rights in these agreements is essential.

• Subcontracting Arrangements: Prime contractors often handle the overall contract with the government, while subcontractors provide specific technology or services. IP agreements should be carefully negotiated to ensure that small businesses retain ownership of their innovations.
• FAR 27.304-3: This clause prevents prime contractors from using their position to unfairly acquire IP rights from subcontractors.

Federal Acquisition Regulation (FAR) Compliance

FAR compliance is a fundamental requirement in government contracting. These regulations provide a framework for government contracts, ensuring that businesses meet ethical standards, follow equal opportunity guidelines, and comply with property and conduct requirements.

• Key FAR Clauses:
• Ethics and Conduct: FAR 52.203-13 outlines the Code of Business Ethics and Conduct, requiring businesses to adhere to ethical practices in their operations.
• Equal Opportunity: FAR 52.222-26 mandates non-discrimination in hiring and employment practices, ensuring fair treatment for all workers, including veterans.
• Government Property: FAR 52.245-1 addresses the use of government property, specifying how businesses should manage and account for any government-owned resources involved in the project.

Export Controls and ITAR Compliance

Dual-use ventures often deal with technologies that may have military or sensitive applications, making them subject to export controls.

• Export Administration Regulations (EAR): Technology subject to EAR is regulated for export based on national security concerns. Companies must understand the restrictions on sharing technology with foreign entities and ensure compliance when taking technology abroad.
• International Traffic in Arms Regulations (ITAR): ITAR governs the export of defense-related materials and technologies. Companies involved in dual-use ventures must be cautious about sharing sensitive technology with non-U.S. persons and ensure that any export activity complies with these regulations.

Conclusion

Understanding the legal landscape surrounding dual-use ventures is essential for navigating government contracts, protecting intellectual property, and ensuring compliance with regulations. By carefully managing eligibility for funding programs like SBIR, safeguarding IP rights, adhering to FAR clauses, and maintaining export control compliance, dual-use ventures can successfully operate in both the commercial and government markets. These considerations provide the foundation for businesses to develop innovative technologies while safeguarding their intellectual property and ensuring long-term success.