Air Force
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The US wants startups to get a piece of the $16 billion spent on space tech
The U.S. government is one of the biggest spenders in the nascent space industry, and the man who handles the money for the Air Force’s $16 billion checkbook wants startups to know that his door is open for them.
In all, Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics, handles about $60 billion worth of budget for the Air Force — a mandate that includes spending money on the new tech initiatives the Air Force deems important.
Historically, the Department of Defense hasn’t been the greatest at working with startups — and many tech companies have been loath to work with the DoD. However, since much of modern civilian infrastructure is based on global positioning systems and other satellite technologies that fall under the Defense Department’s purview, those views on cooperation are changing on both sides.
“Space isn’t a quiet domain of communication and navigation and exploration anymore,” Roper told the audience at TechCrunch’s latest Sessions event, TC Sessions: Space 2020. “It’s increasingly becoming a hostile place… So we’re gearing up a new kind of competition on the military side that could extend to space and that’s creating a lot of new space programs.”
Roper emphasized that the interest from the Air Force and the government more broadly extends well beyond offensive capabilities and military priorities. As space becomes an economic opportunity, Roper sees the Air Force as an engine for driving technology development forward in ways that have commercial benefits.
“It’s a great, great time for innovation in new technologies that could help the military, but we want to do more than just help the military. That’s the old thinking in the Pentagon. That’s all that would help us win the Cold War in the 20th Century, but it’s not going to help us in the 21st, where technology is globalized and accelerating,” Roper said.
“We want to find ways where our military mission and our funding can help accelerate commercial markets too, so it’s competing on a much bigger stage. But we think it’s where we need to aspire to be, so that we’re playing the right catalyst role in this nation and with our partners around the world,” Roper said.
There are several programs that startups can tap to get those federal dollars. Two of the easiest points of entry are through the AFWERX and its recently announced SpaceWERX arm focused entirely on space technology.
“These look like any tech company,” Roper told the audience at the TechCrunch event. “They’re outside our fence lines. They’re easy to walk into… Now you don’t have to know the mission, we will help you find the mission and the customer — the warfighter associated with it. It’s a great model because it keeps the company focused on what they know best, which is their tech.”
Over the last three years, Roper estimated that the AFWERX program had brought 2,300 companies into the Air Force and Space Force programs, and most of them had never worked with the military before, he said.
Within AFWERX there are three programs that particularly relate to integrating startups into the procurement process, Roper said. One is the Spark program, which pairs military with private industry; one is the AFVentures program, which is designed to finance new innovations coming from private industry; and finally there’s the Prime program, which helps commercialize and certify technologies.
Roper pointed to the recent certification the Air Force gave to Joby Aviation for its flying cars. “So there’s a new military market that will hopefully generate a new commercial market,” Roper said.
In 2021, the Prime program will expand to space technologies, according to Roper.
As the demand for new tech grows, there’s no shortage of innovations Roper would like to see from private industry. From new autonomous innovations that could help co-pilot spacecraft to technology for refueling and in-space maneuverability, and reusable equipment from boosters to other components that can bring costs down.
Roper also acknowledged that the Pentagon has a long way to go to “hack the acquisition system” when it comes to dual-use technologies.
Entrepreneurs have pointed out that one of the biggest obstacles to the growth of the commercial space industry has been the inability of the U.S. government to open up the technology for use by private industry.
Roper hopes to change that. “We want to use our military dollars, our mission, and potentially our certifications to help get you there without changing your core product,” he said. “If you succeed as a commercial success, then we succeed as well, because now we’ve got a great tech partner, that hopefully we can continue to come to to solve problems in future. The thing that we’ll want to understand early on is how our military market and all those benefits I just mentioned, how can they help you get to commercial success? And what is it that we not need to do to pull you off that trajectory?”
Contracts with AFWERX are fixed-price and progress as companies hit certain milestones on the product roadmap. These orders increase incrementally as the technology proves itself, so a contract could start with the delivery of a prototype, then experimental usage, then a commercial contract, then broad adoption. “What we’re looking to do is see if you can move the ball forward on your technology, and if you do, then we do another contract. We step you up our process,” Roper said.
Roper sees the project as nothing less than the evolution of the aerospace and defense industry.
“We have a lot of amazing companies today that helped build stealth bombers and space planes and all sorts of awesome stuff. They’re defense companies and we still need them,” Roper said. “What we’re hoping to help build in this century is a set of new companies that are just tech companies. They’re not defense, purely, and they’re not commercial purely. They’re just technology companies and they do a bit of business on both sides.”
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Lt. Gen. John Thompson explains how startups can interact with the Space Force
Space Force’s Lt. Gen. John Thompson spoke at TC Sessions: Space earlier this week. Throughout the wide-ranging interview, General Thompson explained the various ways and means for how private companies like startups should interact with Space Force.
Gen. Thompson knows what he’s talking about. As the commander of the Space and Missiles Systems Center, he oversees research, design, development and acquisition of satellites and their associated command and control systems for the U.S. Space Force. His role puts him in direct contact with some of the most ambitious and innovative startups.
He pointed to three things when asked what’s a good first step for interfacing with the Space Force:
1) Join the Space Enterprise Consortium (SpEC). He describes it as “a purpose-built consortium that values partnerships between government, traditional industry partners, and non-traditional partners like academia, small businesses and startups” that’s grown to more than 440 members in three years.
At the end of the interview, Gen. Thompson notes that he’s working on expanding the deployment of SpEC’s funds to reach more “game-changing technologies that those non-traditional small businesses and startups are bringing to SpEC.
2) Watch for Space Pitch Days. The next event is in the spring of 2021. These pitch days give startups an inside track to government contracts. Apparently, after the first event held with the Air Force, which Gen. Thompson hosted, contracts were offered within three minutes of the pitches.
3) Look into SpaceWERX; a program launched this December to help Space Force work with private sector companies to field new technology for military applications. Like its Air Force counterpart, this “werx” center is a key component for Space Force’s acquisition strategy.
“Dr. Roper just announced it last week at the Space and Missile System Center,” Gen. Thompson said, “[This] is an integral part of the acquisition enterprise of the United States. Space Force is a full partner in the SpaceWERX endeavor. And using the WERX model, we hope to inject more small businesses and startups into our innovation ecosystem.”
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Decrypted: Space hacking, iPhone vulnerability, Zoom’s security boom
Security startups to the rescue.
As we continue to ride out the pandemic, security experts are closely monitoring the surge of coronavirus-related cyber threats. Just this week, Google’s Threat Analysis Group, its elite threat hunting unit, says that while the overall number of threats remains largely the same, opportunistic hackers are retooling their efforts to piggyback on coronavirus.
Some startups are downsizing and laying off staff, but several cybersecurity startups are faring better, thanks to an uptick in demand for security protections. As the world continues to pivot toward working from home, it has blown up key cybersecurity verticals in ways we never expected. To wit, identity startups are needed more than ever to make sure only remote employees are getting access to corporate systems.
Can the startups take on the giants at their own game?
THE BIG PICTURE
Another payments processor drops the security ball
For the third time this year, a payments processor has admitted to a security lapse. First it was Cornerstone, then it was nCourt. This time it’s Paay, a New York-based card payment processor startup that left a database on the internet unprotected and without a password. Worse, the data was storing full, plaintext credit card numbers.
Anyone who knew where to look could have accessed the data. Luckily, a security researcher found it and reported it to TechCrunch. We alerted the company; it quickly took the data offline, but Paay denied that the data stored full credit card numbers. We even sent the co-founder a portion of the data showing card numbers stored in plaintext, but he did not respond to our follow-up.
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The top 10 startups from Y Combinator W19 Demo Day 1
Electric-vehicle chargers, heads-up displays for soldiers and the Costco of weed were some of our favorites from prestigious startup accelerator Y Combinator’s Winter 2019 Demo Day 1. If you want to take the pulse of Silicon Valley, YC is the place to be. But with more than 200 startups presenting across two stages and two days, it’s tough to keep track.
You can check out our write-ups of all 85 startups that launched on Demo Day 1, and come back later for our full index and picks from Day 2. But now, based on feedback from top investors and TechCrunch’s team, here’s our selection of the top 10 companies from the first half of this Y Combinator batch, and why we picked each.
Ravn
Looking around corners is one of the most dangerous parts of war for infantry. Ravn builds heads-up displays that let soldiers and law enforcement see around corners thanks to cameras on their gun, drones or elsewhere. The ability to see the enemy while still being behind cover saves lives, and Ravn already has $490,000 in Navy and Air Force contracts. With a CEO who was a Navy Seal who went on to study computer science, plus experts in augmented reality and selling hardware to the Department of Defense, Ravn could deliver the inevitable future of soldier heads-up displays.
Why we picked Ravn: The AR battlefield is inevitable, but right now Microsoft’s HoloLens team is focused on providing mid-fight information, like how many bullets a soldier has in their clip and where their squad mates are. Ravn’s tech was built by a guy who watched the tragic consequences of getting into those shootouts. He wants to help soldiers avoid or win these battles before they get dangerous, and his team includes an expert in selling hardened tech to the U.S. government.
Middesk
It’s difficult to know if a business’ partners have paid their taxes, filed for bankruptcy or are involved in lawsuits. That leads businesses to write off $120 billion a year in uncollectable bad debt. Middesk does due diligence to sort out good businesses from the bad to provide assurance for B2B deals, loans, investments, acquisitions and more. By giving clients the confidence that they’ll be paid, Middesk could insert itself into a wide array of transactions.
Why we picked Middesk: It’s building the trust layer for the business world that could weave its way into practically every deal. More data means making fewer stupid decisions, and Middesk could put an end to putting faith in questionable partners.
Convictional
Convictional helps direct-to-consumer companies approach larger retailers more simply. It takes a lot of time for a supplier to build a relationship with a retailer and start selling their products. Convictional wants to speed things up by building a B2B self-service commerce platform that allows retailers to easily approach brands and make orders.
Why we picked Convictional: There’s been an explosion of D2C businesses selling everything from suitcases to shaving kits. But to drive exposure and scale, they need retail partners who’re eager not to be cut out of this growing commerce segment. Playing middleman could put Convictional in a lucrative position, while also making it a nexus of valuable shopping data.
Dyneti Technologies
Dyneti has invented a credit card scanner SDK that uses a smartphone’s camera to help prevent fraud by more than 50 percent and improve conversion for businesses by 5 percent. The business was started by a pair of former Uber employees, including CEO Julia Zheng, who launched the fraud analytics teams for Account Security and UberEATS. Dyneti’s service is powered by deep learning and works on any card format. In the two months since it launched, the company has signed contracts with Rappi, Gametime and others.
Why we picked Dyneti: Cybersecurity threats are growing and evolving, yet underequipped businesses are eager to do more business online. Dyneti is one of those fundamental B2B businesses that feels like Stripe — capable of bringing simplicity and trust to a complex problem so companies can focus on their product.
AmpUp
The “Airbnb for electric-vehicle chargers,” ampUp is preparing for a world in which the majority of us drive EVs — it operates a mobile app that connects a network of thousands of EV chargers and drivers. Using the app, an electric-vehicle owner can quickly identify an available and compatible charger, and EV charger owners can earn cash sharing their charger at their own price and their own schedule. The service is currently live in the Bay Area.
Why we picked ampUp: Electric vehicles are inevitable, but reliable charging is one of the leading fears dissuading people from buying. Rather than build out some massive owned network of chargers that will never match the distributed gas station network, ampUp could put an EV charger anywhere there’s someone looking to make a few bucks.
Flockjay
Flockjay operates an online sales academy that teaches job seekers from underrepresented backgrounds the skills and training they need to pursue a career in tech sales. The 12-week bootcamp offers trainees coaching and mentorship. The company has launched its debut cohort with 17 students, 100 percent of whom are already in job interviews and 40 percent of whom have already secured new careers in the tech industry.
Why we picked Flockjay: Unlike coding bootcamps that can require intense prerequisites, killer salespeople can be molded from anyone with hustle. Those from underrepresented backgrounds already know how to expertly sell themselves to attain opportunities others take for granted. Flockjay could provide economic mobility at a crucial juncture when job security is shaky.
Deel
Twenty million international contractors work with U.S. companies, but it’s difficult to onboard and train them. Deel handles the contracts, payments and taxes in one interface to eliminate paperwork and wasted time. Deel charges businesses $10 per contractor per month and a 1 percent fee on payouts, which earns it an average of $560 per contractor per year.
Why we picked Deel: The destigmatization of remote work is opening new recruiting opportunities abroad for U.S. businesses. But unless teams can properly integrate these distant staffers, the cost savings of hiring overseas are negated. As the globalization megatrend continues, businesses will need better HR tools.
Glide
There has been a pretty major trend toward services that make it easier to build web pages or mobile apps. Glide lets customers easily create well-designed mobile apps from Google Sheets pages. This not only makes it easy to build the pages, but simplifies the skills needed to keep information updated on the site.
Why we picked Glide: While desktop website makers is a brutally competitive market, it’s still not easy to make a mobile site if you’re not a coder. Rather than starting from a visual layout tool with which many people would still be unfamiliar, Glide starts with a spreadsheet that almost everyone has used. And as the web begins to feel less personal with all the brands and influencers, Glide could help people make bespoke apps that put intimacy and personality first.
Docucharm
The platform, co-founded by former Uber product manager Minh Tri Pham, turns documents into structured data a computer can understand to accurately automate document processing workflows and take away the need for human data entry. Docucharm’s API can understand various forms of documents (like paystubs, for example) and will extract the necessary information without error. Its customers include tax prep company Tributi and lending business Aspire.
Why we picked Docucharm: Paying high-priced, high-skilled workers to do data entry is a huge waste. And optical character recognition like Docucharm’s will unlock new types of businesses based on data extraction. This startup could be the AI layer underneath it all.
Flower Co
Flower Co provides memberships for cheaper weed sales and delivery. Most dispensaries cater to high-end customers and newbies that want expensive products and tons of hand-holding. In contrast, Flower Co caters to long-time marijuana enthusiasts who want huge quantities at low prices. They’re currently selling $200.000 in marijuana per month to 700 members. They charge $100 a year for membership, and take 10 percent on product sales.
Why we picked Flower Co: Marijuana is the next gold rush, a once-in-a-generation land-grab opportunity. Yet most marijuana merchants have focused on hyper-discerning high-end customers despite the long-standing popularity of smoking big blunts of cheap weed with a bunch of friends. For those who want to make cannabis consumption a lifestyle, and there will be plenty, Flower Co could become their wholesaler.
Honorable Mentions
Atomic Alchemy – Filling the shortage of nuclear medicine
Yourchoice – Omni-gender non-hormonal birth control
Prometheus – Turning CO2 into gas
Lumos – Medical search engine for doctors
Heart Aerospace – Regional electric planes
Boundary Layer Technologies – Super-fast container ships
Additional reporting by Kate Clark, Greg Kumparak and Lucas Matney
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Dreaming of Mars, the startup Relativity Space gets its first launch site on Earth
3D-printing the first rocket on Mars.
That’s the goal Tim Ellis and Jordan Noone set for themselves when they founded Los Angeles-based Relativity Space in 2015.
At the time they were working from a WeWork in Seattle, during the darkest winter in Seattle history, where Ellis was wrapping up a stint at Blue Origin . The two had met in college at USC in their jet propulsion lab. Noone had gone on to take a job at SpaceX and Ellis at Blue Origin, but the two remained in touch and had an idea for building rockets quickly and cheaply — with the vision that they wanted to eventually build these rockets on Mars.
Now, more than $35 million dollars later, the company has been awarded a multi-year contract to build and operate its own rocket launch facilities at Cape Canaveral Air Force Station in Florida.
That contract, awarded by The 45th Space Wing of the Air Force, is the first direct agreement the U.S. Air Force has completed with a venture-backed orbital launch company that wasn’t also being subsidized by billionaire owner-operators.
By comparison, Relativity’s neighbors at Cape Canaveral are Blue Origin (which Jeff Bezos has been financing by reportedly selling $1 billion in shares of Amazon stock since 2017); SpaceX (which has raised roughly $2.5 billion since its founding and initial capitalization by Elon Musk); and United Launch Alliance, the joint venture between the defense contracting giants Lockheed Martin Space Systems and Boeing Defense.
Like the other launch sites at Cape Canaveral, Launch Complex 16, where Relativity expects to be launching its first rockets by 2020, has a storied history in the U.S. space and missile defense program. It was used for Titan missile launches, the Apollo and Gemini programs and Pershing missile launches.
From the site, Relativity will be able to launch its first designed rocket, the Terran 1, which is the only fully 3D-printed rocket in the world.
That rocket can carry a maximum payload of 1,250 kilograms to a low earth orbit of 185 kilometers above the Earth. Its nominal payload is 900 kilograms of a Sun-synchronous orbit 500 kilometers out, and it has a 700 kilogram high-altitude payload capacity to 1,200 kilometers in Sun-synchronous orbit. Relativity prices its dedicated missions at $10 million, and $11,000 per kilogram to achieve Sun-synchronous orbit.
If the company’s two founders are right, then all of this launch work Relativity is doing is just a prelude to what the company considers to be its real mission — the advancement of manufacturing rockets quickly and at scale as a test run for building out manufacturing capacity on Mars.
“Rockets are the business model now,” Ellis told me last year at the company’s offices at the time, a few hundred feet from SpaceX. “That’s why we created the printing tech. Rockets are the largest, lightest-weight, highest-cost item that you can make.”
It’s also a way for the company to prove out its technology. “It benefits the long-term mission,” Ellis continued. “Our vision is to create the intelligent automated factory on Mars… We want to help them to iterate and scale the society there.”
Ellis and Noone make some pretty remarkable claims about the proprietary 3D printer they’ve built and housed in their Inglewood offices. Called “Stargate,” the printer is the largest of its kind in the world and aims to go from raw materials to a flight-ready vehicle in just 60 days. The company claims that the speed with which it can manufacture new rockets should pare down launch timelines by somewhere between two and four years.
Another factor accelerating Relativity’s race to market is a long-term contract the company signed last year with NASA for access to testing facilities at the agency’s Stennis Space Center on the Mississippi-Louisiana border. It’s there, deep in the Mississippi delta swampland, that Relativity plans to develop and quality control as many as 36 complete rockets per year on its 25-acre space.
All of this activity helps the company in another segment of its business: licensing and selling the manufacturing technology it has developed.
“The 3D factory and automation is the other product, but really that’s a change in emphasis,” says Ellis. “It’s always been the case that we’re developing our own metal 3D printing technology. Not only can we make rockets. If the long-term mission is 3D printing on Mars, we should think of the factory as its own product tool.”
Not everyone agrees. At least one investor I talked to said that in many cases, the cost of 3D printing certain basic parts outweighs the benefits that printing provides.
Still, Relativity is undaunted.
But first, the company — and its competitors at Blue Origin, SpaceX, United Launch Alliance and the hundreds of other companies working on launching rockets into space again — need to get there. For Relativity, the Canaveral deal is one giant step for the company, and one great leap toward its ultimate goal.
“This is a giant step toward being a launch company,” says Ellis. “And it’s aligned with the long-term vision of one day printing on Mars.”
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