National Security Technology Investor Razor’s Edge Closes Oversubscribed $340 Million Investment Fund

Razor’s Edge Ventures closes $340M fund as it looks to invest in defense startups https://t.co/m4Ro0xkNua by @Kyle_L_Wiggers

— TechCrunch (@TechCrunch) September 20, 2022

As OODA CEO Matt Devost mentioned at OODAcon 2022,  Razor’s Edge Ventures recently made a commitment to national security investment to enhance American competitiveness by closing on a fund dedicated to “current technology areas of interest for the firm, which are informed by strategic U.S. national security priorities, [such as] autonomous systems, space technologies, cybersecurity, artificial intelligence/machine learning, digital signal processing, and other aerospace and defense technologies”:

“Razor’s Edge, a leading national security-focused technology investor, [on September 20, 2022] announced the final closing of its third investment fund, at just under $340 million. Significantly exceeding the firm’s original fundraising target of $250 million, this result reflects strong investor support for the firm’s strategy of investing in sophisticated companies that are key to helping the United States maintain technological superiority over its adversaries.  Razor’s Edge was founded in 2010 by a seasoned team of entrepreneurs and operating executives who collectively bring decades of experience helping national security community customers solve difficult technology problems and advance critical missions.

‘Our third fund will continue the approach we have successfully applied since the beginning. The U.S. faces an increasingly complex and rapidly growing national security threat environment. We work diligently across our portfolio to help our customers solve the hardest problems and maintain a technological advantage over near-peer adversaries,’ said Peggy Styer, Co-Founder and Managing Partner.

‘Our laser focus on supporting elite customer missions and obsession with building innovative cultures attract exceptional founders to the firm and drive a high volume of deal flow,’ noted Jack Kerrigan, Co-Founder and Managing Partner. ‘We have already completed five new investments in 2022.’

‘We have a fantastic group of new and long-standing investors and want to thank them for their commitment to Razor’s Edge,” said Mark Spoto, Co-Founder and Managing Partner. ‘The fact that this fund significantly exceeded our initial target speaks to the trust our investors have in the team and the enthusiasm they have in our ability to deliver venture capital returns while leveraging our operating experience to hedge against risk.’ (1)

For OODA members with WSJ Pro access, see:  National-Security-Focused Venture Firm Raises Fund as Sector Grows (wsj.com) or the official Razor’s Edge Ventures Press Release.

What Next?

• The venture capital community is focusing its efforts on this sector, which has been formatively dubbed the “defense-related technologies” or “defense capabilities” sector.   Razor’s Edge efforts are very similar to that of America’s Frontier Fund (AFF) which recently garnered attention from Foreign Policy (FP) Magazine in an article entitled  “Could Venture Capital Be the New Frontier in Great-Power Competition? In the era of great-power competition, America’s Frontier Fund aims to harness venture capital to advance U.S. strategic interests.”  As AFF Co-founder and President Jordan Blashek notes:  “China invests for power, whereas the United States invests for profit. Success for America’s Frontier Fund is to do both.”  For OODA Loop readers with FP access, see: America’s Frontier Fund Aims to Harness Venture Capital for the National Interest.
• We continue to integrate the tactical insights, and strategic implications, including the follow-up research questions that emerged from OODAcon 2022 – The Future of Exponential Innovation & Disruption  – and the Canceling the Apocalypse:  Funding the Next Generation of Innovation session, which included OODA CEO Matt Devost with Matt O’Connell (Operating Partner at DCVC) Zach Beecher (Chief of Staff, America’s Frontier Fund)  exploring what problem sets and global risks represent strategic investment opportunities that help reduce those risks, but also ensure future global competitiveness in key areas of national defense?  The session provided insights from venture funds making key investments in these technologies and fostering future high-value innovation.

Further OODA Loop Resources

• Research and analysis on the Global Computer Chip Supply Chain Disruption, the Chips Act, and the Chips and Science Act.
• The OODA Network on Deep Tech and the Valley of Death.
• America’s Frontier Fund and the Quad Investor Network:  In July, Cyberscoop.com reported on the launch of America’s Frontier Fund (AFF), which is an extraordinary public/private partnership and non-profit organization dedicated to America’s Great Power competitive advantage through global technology leadership in what some call “deep tech” or “frontier tech.” The initial Cyberscoop coverage suggested that the fund was dedicated to cybersecurity, but upon further research and analysis, the fund is designed for a much broader portfolio of technology investments.  By all accounts, the AFF is serious business and a refreshing private sector commitment at scale –  with tech industry heavyweights putting financial resources on the table along with the unique expertise of equally as impressive a roster of government policy experts.
• A Proactive National Technology Strategy in the Great Power Competition with China:  The co-authors of a recent article in Foreign Affairs, America Could Lose the Tech Contest With China, Eric Schmidt and Yll Bajraktari, are Chair and CEO of the Special Competitive Studies Project (SCSP), respectively. The SCSP “builds on the work of the National Security Commission on Artificial Intelligence (NSCAI), which ended its congressionally-mandated work in October 2021.  NSCAI made recommendations to the President and Congress to “advance the development of artificial intelligence, machine learning and associated technologies to comprehensively address the national security and defense needs of the United States.” The author’s diagnosis of the root cause of the problem is aligned with the drivers behind the recent launch of America’s Frontier Fund and the Quad Investor Network (with which Eric Schmidt is also affiliated) and maps to many of the recent “Deep Tech” and “Valley of Death” discussions here at OODA Loop.
• CSET on China’s Advanced AI Research and the China AI “Watchboard” Pilot Program:  We have integrated Center for Security and Emerging Technology (CSET) research into our OODA Loop research and analysis on topics ranging from artificial intelligence, dis- misinformation and information disorder (what we characterize as a crucial strategic need for National Cognitive Infrastructure Protection), technology talent retention, and the CHIPS Act.  The recent CSET report “China’s Advanced AI Research: Monitoring China’s Paths to ‘General’ Artificial Intelligence “examines what paths to general AI are available in principle, as a prelude to describing work underway in China to realize that capability. The report authors also “preview a pilot program…as a starting point for China-focused indications and a warning watchboard…that will track China’s progress and provide timely alerts.”
• Mergeflow CEO and OODA Network Member Florian Wolf on “Small Data” (Part 2 of 2):  In Part 1 of this interview, we checked in with Mergeflow CEO and OODA Network Member Florian Wolf about all things machine learning and small data.  In Part 2, we continue the conversation with Florian spanning a wide range of topics, including the real-life lessons of machine learning innovation, the centrality of data, problem-solving over performance as the competitive advantage while developing ML systems, leading a team, what keeps him up at night, what he is tracking and what he is excited and hopeful about in the future.
• The September 2022 OODA Network Member Meeting: Dr. Bilyana Lilly Presents Research on Russian Information Warfare:  The September call (held on Friday, September 16th) had a unique format, with Dr. Bilyana Lilly presenting to the OODA Network on the topic of Russian Information Warfare: Questions, Cases, Frameworks, and Conclusions – which is also the subject of her new book,  Russian Information Warfare: Assault on Democracies in the Cyber Wild West.
• From AI Principles to AI Practice at a Global Scale: The MIT AI Policy Forum (AIPF) is a global initiative at The MIT Schwarzman College of Computing, which was launched in 2018.  The Blackstone Group Chairman Stephen A. Schwarzman donated $350 million of the $1.1 billion of funding committed to the school, which is the “single largest investment in computing and AI by an American academic institution.” What sets the AIPF apart from all other organizations dedicated to AI research and policy is its commitment to global collaboration moving from AI principles to AI practice. The leadership at the AIPF is committed to making a tactical impact.  In the last few years, the sheer amount of think tanks, government agencies, and academic institutions developing “high-level principles on the social and ethical issues” of AI started to feel like a perfect storm of analysis paralysis and scope creep.   It is this transition from principles to practice with a sense of urgency, intervention, and action which sets the AIPF apart from all the other resources we have explored in our research and analysis of the future of AI.  Simply put:  It is time for a “Decide and Act” phase after the collective “Observe, Orient” analysis phase which has been applied to certain aspects of mission-critical social and ethical issues such as privacy, fairness, bias, transparency, and accountability. To echo the AIPF:  “Now, it is time to take the next step.”

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