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Venture Capital Industry Makes Inroads in Non-Traditional Markets

The New York Times DealBook column is a useful source of interesting information. However, this week a few things struck me as particularly intriguing. Apparently the United States Department of Defense (DoD), the $600B+ entity that runs the largest supply chain operation in the world, has discovered the power of venture capital. The Defense Venture Catalyst Initiative is a collaboration between the DoD and venture capitalists that seeks to “utilize private sector Venture Capital (VC) expertise in discovering and evaluating the merits of emerging technology” in order to solve DoD problems.1 It is a huge vote of confidence for the VC industry, something most Americans are unfamiliar with and unsure of, to have the DoD explicitly acknowledge that venture capitalists have unique and important skills. While the government might not be broadly popular, the Department of Defense is a completely different entity, and I think their vote of confidence will speak to a large sector of the public.

Once the government acknowledges that venture capitalists can contribute meaningfully to the largest public sector agency, there can’t be much left out there, right? (Insert your “the government is the slowest adopter” joke here.) Actually, the NFL announced this week that it is looking to join the venture capital game too.2 The league, managed by some of the country’s wealthiest and most successful businesspeople, is looking to start its own $30M+ venture capital fund. The owners might even let the Players Union invest alongside its fund. While the NFL owners are looking to be active in the “angel” space rather than the traditional venture capital arena, you would have to think that the MLB, the NHL, and the NBA can’t be far behind the curve here. This, like the DoD involvement, is a positive step for the VC industry as a whole; if there is anything that can help shape a positive view of venture capital with Main Street America, its good old football.

It’s no secret in the financial industry that venture capitalists are skilled entrepreneurs with a keen eye for trends and good investments. However, having two giants like the NFL and the Department of Defense openly acknowledge that the industry offers a unique skill set is a great thing. It is good for the investors, and it’s good for the profile of the Venture Capital industry as a whole.



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Joseph R. Morrison, Jr.

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