The Department of Defense’s Office of Strategic Capital (OSC) runs a credit program that provides debt financing to eligible borrowers in critical technology areas that drive national and economic security. OSC’s loan and loan guarantee authority is utilized to attract and scale investments for national security.

The OSC has released its FY2025 Investment Strategy, emphasizing the prioritization of investments to strengthen national security by leveraging private capital to scale critical technologies. Companies seeking to leverage the OSC programs should review this strategy closely.

Why It Matters

The FY2025 Investment Strategy builds upon OSC’s mandate to ensure U.S. competitiveness in critical technology domains, outlined in the National Defense Authorization Act (NDAA) for Fiscal Year 2024. The initiative directly addresses the rising strategic competition, particularly with China and Russia, by prioritizing economic networks, key industries, and critical technologies.

• Strategic Prioritization: OSC focuses on economic chokepoints, medium-term industry dominance, and long-term technological leadership.
• Collaboration: The strategy underscores partnerships with private sector stakeholders and government entities to align investments with national security objectives.
• Comprehensive Scope: It leverages commercial best practices to assess, prioritize, and invest across 31 “Covered Technology Categories” defined by Congress.

For the full document, see: FY2025 Investment Strategy for the Office of Strategic Capital.

Key Points

• Economic Networks: Investments target vulnerabilities in supply chains and capital dependencies, mitigating chokepoints exploited by adversaries.
• Critical Technologies: Focus areas include microelectronics, synthetic biology, battery storage, and autonomous systems, aligned with the 14 critical technology areas.
• Investment Mechanisms:
  • Equipment finance loans of $10M–$150M.
  • Loan guarantees for scaling production and innovation.
• Analytical Approach: Combines quantitative tools (e.g., network analysis) and qualitative insights (e.g., global market dynamics) to optimize allocations.

What’s Next

OSC’s FY2025 strategy launches its direct lending program in early 2025 to fund critical infrastructure development. Future efforts will expand its toolkit, incorporating lessons learned to further refine and enhance the U.S.’s competitive edge in key industries.

Recommendations

• Investors: Engage with OSC initiatives to align with national security priorities and unlock new opportunities in high-growth industries.
• Businesses: Explore eligibility for OSC’s loan and loan guarantee programs to bolster technological development and production capacities.

About the Author

Bob Gourley

Bob Gourley is an experienced Chief Technology Officer (CTO), Board Qualified Technical Executive (QTE), author and entrepreneur with extensive past performance in enterprise IT, corporate cybersecurity and data analytics. CTO of OODA LLC, a unique team of international experts which provide board advisory and cybersecurity consulting services. OODA publishes OODALoop.com. Bob has been an advisor to dozens of successful high tech startups and has conducted enterprise cybersecurity assessments for businesses in multiple sectors of the economy. He was a career Naval Intelligence Officer and is the former CTO of the Defense Intelligence Agency.