One way hot tech meets cold cash

American Security Challenge creates a forum where entrepreneurs can meet potential customers and in some cases find new sources of funding.

The federal government has an unquenchable thirst for new thinking, new technology that can solve problems and save lives. Entrepreneurs with new technology want to sell to the government. So what’s the problem?

“There’s a disconnect between the people who consume the technology and those who make it,” said Roger London, advisory board chairman for the 3-year-old American Security Challenge. What London does, he said in September at the unveiling of ASC’s annual award-winners, is help investors, entrepreneurs, companies and agency staff members make the connection.

If, as former Homeland Security Secretary Tom Ridge, speaking at ASC’s awards conference, said, “over the next few years in Washington, the biggest opportunities are going to be in cyber and energy,” the slate of challenge winners reflected that trend.

The 13 companies selected by ASC for 2010 won six pilot awards, 10 investor awards, one official protégé-mentor relationship award, and one prestigious if otherwise prizeless “American Idol"-type award.

For ASC pilot awards, large companies or federal agencies that have the money, the need or the contract vehicle available to buy the award winner’s product or service, underwrite a pilot of the winning company’s technology.

Pilot award winners for 2010 include: Bit9 Inc., BlueCat Networks Inc., Chiliad Inc., PikeWerks Corp., Rapid7 Inc. and Triumfant Inc. Two others have not been announced and another two may be added, London said. “We should end up with around 10 challengers selected to participate in" pilot programs, he said.

Several other companies won investor awards, including: AginCourt Solutions Inc., CipherOptics Inc., Oculis Labs Inc., Rsignia Inc., Roundtrip Inc., Techno-Sciences Inc., and Widetronix Inc., as well as PikeWerks Inc. Pilot program award-winner Rapid7 Inc. also received two investor awards.

Getting an ASC investor award doesn’t guarantee an inflow of cash, but it does offer promise. What the award signifies, London said, is that “these companies have passed through preliminary due diligence and appear to match the investment criteria of the investors.”

It means that the companies have already made it through two rounds of grilling by more than 100 experts in the field, investors, government and defense officials and technology experts, to winnow the list from an initial 150 candidates.

It also moves the companies -- or challengers, as they’re dubbed -- to the top of the investment candidate list. “The next step is private presentations by the selected challengers with the investor’s investment committee," London said. "If all goes well, the investor will perform final and complete due diligence.”

If the challenger company still looks good, “the investor will make an offer [extend a term sheet], which the two parties will negotiate,” he said.

ASC’s first-year event resulted in $100,000 of investment; 2009 event challengers brought home more than $10 million in investment capital, term sheets, teaming and subcontract agreements. Between $20 million and $25 million in investment capital, term sheets, teaming and subcontract agreements projected for challengers in the nonprofit ASC’s 2010 event.

ASC challenger Harbor Wing Technologies Inc. won what may be the grand prize: Raytheon Co. will take the Seattle-based company under its own wing under the Defense Department Mentor Protégé Program.

Raytheon special projects manager Terry Downing praised the DOD program. “The government gives big companies up to $1 million a year for three years to mentor” innovative small companies, he said. “One we found is Harbor Wing Technologies.”

Harbor Wing’s WingSail autonomous, unmanned surface vessel, the wind-powered Harbor Wing AUSV, can sail for months, unattended, across oceans. With the AUSV harnessing the wind to provide power, it means “we can provide technology at very low energy use,” Downing said. “The Navy needs USVs for ISR and to maintain domain awareness,” and the WingSail could be part of those solutions, he said. But it also holds promise in helping the National Oceanic and Atmospheric Administration track and protect sea turtles, and monitor marine mammals, help in undersea gas and oil exploration, and survey and map oceans.