Defense companies courting startups: Fad or lasting trend?

• Author: Erwin, Sandra I.

During a closed-door meeting with top industry executives last month, Defense Secretary Ashton Carter once again sought to drive home the message that companies need to break out of their cocoon to help the Pentagon bring the next wave of innovation.

The conversation touched on familiar topics, according to participants, but Carter seemed especially animated by one executive's comments about a recent industry "speed-dating" event where commercial startups were invited to hear about business opportunities with defense contractors.

"His eyes lit up when Raanan talked about this," recalled Bob Edmonds, vice president of Elbit Systems of America.

Elbit CEO Raanan Horowitz gave Carter a brief account of the matchmaking event, hosted by tech startup SwitchPitch, where major defense contractors sought to attract commercial innovators that typically do not do business with the government.

This sounded like the type of outreach Carter had been wanting to see in the defense industry as Pentagon officials have grown increasingly worried about the military's eroding technology edge and the cultural divide between the commercial and defense sectors. The most innovative industries in decades past were embedded in the defense establishment, but they now live in separate worlds. Carter and others fear that the Pentagon and its top contractors have built walls around the sector, keeping out innovators and creative thinkers.

The SwitchPitch model is one of many avenues that defense contractors are pursuing to "see what's out there," Edmonds told National Defense.

A four-year old venture, SwitchPitch was created to offer scrappy startups and small businesses an opportunity to break into corporate America. The meeting the company hosted in September in Arlington, Virginia, was the first one that focused on the defense and aerospace markets.

About 50 startups attended from across the country. Seven projects were pitched by BAE Systems, Harris Corp. and Elbit Systems, and 98 speed-meetings were held between large contractors and startups. Jerry McGinn, the Defense Department's principal deputy director of the manufacturing and industrial base policy office, spoke at the event about the Pentagon's desire to create new paths into the defense market.

Everyone seemed pleased by the results, said Michael Goldstein, president of SwitchPitch. The positive reaction speaks to the vast appetite for innovation in defense and aerospace, he said. The company provides a...