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How Lockheed Martin Ventures manages its early-stage $200M fund

In niche markets like aerospace, where the traditional VC model might not yield an abundance of available funding, corporate venture funds can offer entrepreneurs an interesting alternative.
Unlike traditional VCs, firms like Lockheed Martin Ventures are in constant contact with internal business units about challenges they need solved, or improvements theyre seeking that cannot be sourced internally or through existing vendors.
Lockheed Martin Ventures Executive Director and General Manager J. Christopher Moran explains that while in the past that has traditionally meant the companys in-house VC sought out later-stage investments in companies with more mature technology, the fund recently shifted its focus to early-stage companies.
[Lockheeds venture arm] was actually established in 2007, as a fund called the Emerging Technologies Funds, Moran said in an interview. And it was a vehicle for the business areas to look for and find small startups [] They were using it to look for sort of leading edge, but more mature technology. We started realizing that what we wanted to do was focus more on commercial tech, with a dual-use capability for aerospace, then that made us think that we should probably be looking at much earlier stage companies.
Aerospace has always spun out dual-use technologies like GPS and satellite imaging, but todays startups are solving larger problems; autonomous technologies like machine learning, computer vision, neural networks and artificial intelligence have tremendous potential for application in Lockheeds aerospace and defense businesses but most of the startups working on these challenges are geared towards automakers and mobility, since they offer a clearer and more immediate path to revenue.
Moran accordingly shifted the focus of the fund, aiming its investments at much earlier stage companies, and looking instead for leading edge or visionary startups. Once identified, they look to establish partnerships with areas of Lockheeds business to help inform the startups work at an earlier stage in the process.
Lockheed Martin Ventures now has $200 million committed, and Moran says it has returned around $80 million on its first $100 million invested already in its first decade of operation. Its an evergreen fund by design, meaning that returns generated by the fund go back into funding more startups through the venture wing exclusively.
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