McLean management and IT consulting giant Booz Allen Hamilton has launched a venture capital unit that aims to help young companies speed the development of technologies used by the federal government.
Operating as a wholly owned subsidiary of Booz Allen Hamilton (NYSE: BAH), Booz Allen Ventures LLC will invest $100 million over five years in firms developing artificial intelligence, machine learning, cybersecurity and defense technologies, the company said. Susan Penfield, Booz Allen's chief technology officer, said that creating the venture arm was a logical next step for a company that has become "a bigger player in the technology ecosystem" over the last 10 years.
The venture fund has already begun making investments, including one in April in Silicon Valley military software developer Reveal Technology Inc. That firm’s AI-enabled software platform provides military squads in high-risk environments with intelligence, surveillance and reconnaissance information on the ground without the need for network connectivity.
In March, it participated in a $13 million funding round for Delafield, Wisconsin, AI firm Synthetaic Inc. and in July 2021 it took a minority stake in Menlo Park, California-based Latent AI Inc., a company that helps optimize AI and machine learning capabilities and to make them accessible through the reach of cloud services.
Exact terms of the three deals weren’t disclosed, but Penfield said that most of its investments have been in the $1 million to $2 million range, with one investment reaching around $5 million.
Booz Allen, which is the largest AI services provider to the federal government, plans to make about six to eight investments per year through its venture arm, Penfield said in an interview with the Washington Business Journal.
“The goal is to really look at interesting technologies that have the wherewithal to support many of the missions that we are pursuing in our federal government space,” she said.
Penfield did not rule out the possibility of Booz Allen ultimately acquiring some of the firms it's helping to nurture. “The door is always open to look at that,” she said.
Booz Allen invested in the Fredericksburg, Virginia, cybersecurity company Tracepoint in January 2021 and purchased it later that year, but another deal it has in the works, for Reston cybersecurity contractor EverWatch Corp, is on hold after the Department of Justice recently sued to block it. DOJ alleged the deal would drive up prices for the government and stifle competition for contracts with the National Security Agency. Booz Allen said in a statement it disagreed with “the DOJ’s characterization” of the acquisition and that it intended to defend itself against the allegations.
