On January 13, 2021, the Department of Defense (DoD) announced the launch of its Trusted Capital Digital Marketplace (TCDM) to support the qualified small and medium-sized enterprises (“Domestic Enterprises”) that make up the Defense Industry (DIB). TCDM is establishing a forum to provide select innovative domestic companies with access to “audited” private sources of capital in the form of loans, loan guarantees, incentives and investments to improve the DIB’s ability to meet our defense and national security needs .
The TCDM has been in development for several years and is composed of military stakeholders, trusted financiers, and capability providers.
The military actors participate in this forum by deploying Rapid Acquisition Vehicles to identify innovative capability providers that are viewed as critical to their supply chains. Such “down vote” vendors of defense-critical and dual-use solutions are candidates for TCDM.
The Trusted Investors are “Trusted Financial Institutions and Qualified Firms” who invest in the top 27 technology areas that are important and relevant to the Department of Defense, including hypersonic, directional energy, space, autonomy, cyber, quantum science, microelectronics and biotechnology, artificial intelligence and machine learning (AI / ML) as well as fully networked management, control and communication (“key technologies”). These trusted financiers are ready and willing to invest in dual-use technology. You can also invest at different stages of the funding cycle, including seed to direct loans, to fill funding gaps in government funding programs such as small business innovation research funding, small business management development programs, and others. Trusted financiers apply for the TCDM program through the online application on the TCDM website. An annual recertification is required for approved trustworthy investors.
The capability providers are domestic companies previously selected by the military stakeholders who specialize in the provision and / or development of products and services related to the key technologies. The skill providers can submit a white paper to start the process.
Ellen M. Lord, Secretary of Defense for Acquisitions and Sustainability, stated that certain domestic companies in the DIB “are vulnerable to controversial capital, [s]o We have to make sure [these] Organizations can stay in business without losing their intellectual property – the foundation of so many critical technologies. “Examples of the predatory investment tactic employed by our nation’s opponents are the” use [of] Frontline companies, joint ventures, mergers and acquisitions, foreign direct investment, and talent acquisition programs to gain access to and use of US technology and intellectual property. “Ms. Lord also noted that domestic businesses are now even more vulnerable due to the ongoing COVID-19 pandemic. For example, from January to April 2020, China announced 57 outbound mergers and acquisitions worth $ 9.9 billion and 145 outbound investments worth $ 4.5 billion in the U.S. and related countries.
Ms. Lord also noted that US economic and national security is being maintained through the acquisition of domestic defense and commercial companies developing key technologies by US-based organizations that are actually owned or controlled by hostile foreign companies, can be undermined.
It is currently unclear whether the incoming Biden administration will continue the TCDM. In this case, however, the TCDM is led by Katie Arrington, Chief Information Security Officer, Acquisitions and Sustainability (CISO (A&S)), and Colin Supko, Director of Trusted Capital.
The TCDM is important because it provides domestic companies (including startups) in the DIB with capital providers who do not pose a security risk. and a foreign company that otherwise meets the requirements of CFIUS and that a US-based startup focusing on key technologies is looking to acquire, merge, or otherwise strategically invest, with a framework designed to demonstrate this to the US government as ” trustworthy investor “.