With $100 million in new funding, Lockheed Martin Ventures seeks to accelerate pace

By Marjorie Censer / June 6, 2018

Lockheed Martin Ventures, the venture capital arm of Lockheed Martin that was rebooted two years ago, is set to receive another $100 million in funding following the new tax law, the company said today.

Chris Moran, who took over leadership of the venture organization in 2016, told reporters during a roundtable today he's hoping to use the new money -- the additional $100 million doubles the size of the fund -- to access the technology of more companies.

He said Lockheed Martin Ventures has invested about $40 million in eight new companies in the two years he's been leading the organization. With an infusion of funding, he said he'll focus on accelerating its work.

“If you look at any venture fund . . . the typical pace of investment is two investments per year per investment manager,” Moran said. “We have three investment managers right now, and the ask was if we could add a couple staff to allow us to increase the pace of that.”

He said Lockheed Martin Ventures seeks to move from about four investments per year to six or even eight.

“The $200 million will allow us to work with more companies,” Moran said.

He said Lockheed Martin Ventures' won't change its focus on relatively small investments in companies that are in the late seed stage or seeking series A funding.

“We're staying with that,” Moran said. “When you look at the bigger fund available, the way we look at it is not spending more on one company, but trying to do more companies.”

The smallest investment the venture arm makes is about $500,000, he said, while its largest is about $5 million in a single round. “The sweet spot, though, seems to be about $2 [million] to $3 [million],” Moran said.

He also noted the venture organization is seeking to “expand a little bit globally,” initially looking to the United Kingdom and Australia.

Lockheed Martin Ventures now gets about 400 to 500 leads per year, he said, noting he is hoping to increase that to about 1,000.

“You want to be overwhelmed with inbound opportunities because it makes you look more discriminating[ly] at what's coming in,” Moran said. “You find the best things, not just the first things.”

Moran cited the organization's investment in nanosatellite company Terran Orbital as one of its success stories thus far.

“Lockheed has already done over nine [requests for proposals] with the company, we've won two programs with them already, and so we're starting to place a significant amount of business in this area,” he said. “Our focus there has been to explore areas that maybe we wouldn't have done with our larger satellite buses that we'd manufacture ourselves.”

He said the venture arm assesses each of its companies quarterly, including evaluating whether the company is a performer -- meaning it's meeting its financial and technological targets -- and whether it's a strategic play for Lockheed -- meaning it has technology that will prove relevant.

Moran acknowledged that Lockheed Martin Ventures is seeing competition, both from its own industry and from commercial businesses. Airbus and Boeing both have venture funds, while automakers are often seeking similar autonomous technology, Moran said.

“We can't not bump into each other,” he said. “We're chasing the same stuff.”

Meanwhile, Lockheed announced today it plans to make $460 million in new investments -- including the $100 million for Lockheed Martin Ventures -- it said are enabled by the tax law passed last year.

The contractor said it will use $200 million in 2018 to increase its investments in capital expenditures and research and development. Another $100 million is set aside for employee training, certification and tuition assistance programs, as well as career development initiatives, while $50 million will go to science, technology, engineering and math education enrichment programs, including a new Lockheed Martin STEM Scholarship Fund. The company said it is spending $10 million on an innovation prize competition.