With its latest portfolio investment, Booz Allen Ventures has cemented a key priority for the larger government IT brand — artificial intelligence technology, and its potential value in federal and defense contracting.
The venture arm of McLean-based Booz Allen Hamilton Inc. (NYSE: BAH) has made an undisclosed investment, its fourth, in Credo AI, a San Francisco startup whose software platform essentially helps puts up guardrails around AI algorithms in hopes of increasing their accountability and removing some of the ethical risks around their use.
For Booz Allen Ventures, the move illustrates a pattern of investments in AI-driven technologies in an effort to tap into what its leaders consider the next technological wave. John Larson, a Booz Allen Hamilton executive vice president who heads up its AI practice, has seen past waves around big data, nonfungible tokens (NFTs) and Web 3, but he says AI is different.
"It's probably the most transformative technology since electricity,” Larson said. "It's changing the nature of work. And I think those are the things that we're gonna have to really think through and assess and evaluate.”
With Credo, Larson said Booz Allen is investing in what's described as a more "responsible" use of AI, which itself is gaining ground. The White House has invested $140 million through the National Science Foundation to conduct research around responsible AI to help protect people's rights and safety as the government continues to pursue more AI innovation. A $20 million piece of that pot is already going to a collaboration between George Washington University, University of Maryland and Morgan State University, among other organizations, to create an NSF Institute for Trustworthy AI in Law & Society.
“We looked at Credo and said, 'What they've got is a framework, a tool set that we think we can plug into our AI operations framework and allow us to harness the power of AI, but put governance and guide rails in an automated way,” Larson said.
Credo was founded in 2020 by former Microsoft and Qualcomm exec Navrina Singh, now its CEO, and former Netflix and Twitter engineering exec Eli Chen, now its chief technology officer. It was initially backed by investors such as AI Fund, Decibel, Village Global and, more recently another local firm, Arlington-based Sands Capital, which led a $12.8 million Series A round in the startup this time last year.
Its the fourth such investment for Booz Allen Ventures since it launched its $100 million fund, following injections to Latent AI, with offices in Menlo Park, California, and Skillman, New Jersey; Synthetaic, based in Delafield, Wisconsin; and Reveal Technology, with bases in San Francisco and Bozeman, Montana. In all, Larson said he believes a significant portion of the $100 million fund could flow to AI ventures.
Already, Booz Allen Hamilton has applied and blended the technology of Latent AI, in which it invested in 2021, and Synthetaic, in which it invested in 2022, to help improve its Bighorn Artificial Intelligence Kit, a package it's selling to military and government customers to expand datasets and run AI across several types of devices.
More broadly, Booz Allen is joined by a slew of government contractors looking to invest in smaller or earlier-stage startups with the goal of merging their technologies and expertise into the larger company.
“We want to be at the tip of the spear with these innovative technologies,” Larson said. “The investment philosophy is really about our ability to integrate those capabilities around those mission applications and do it in a way that doesn't require us to duplicate an effort that's already being figured out. That's not an efficient use of government money or Booz Allen money if someone else has already solved the problem.”
