👩🏽🚀 The Acquisitions Co. Field Guide
A guide to navigating government for early-stage startups
Backstory + Target Audience
For the last several years, I’ve been privileged to work at the intersection of startups and government. Many of the people I meet are leaders of early-stage technology startups trying to figure out how to work with the government. As an early-stage startup, working with the federal government can be confusing, rife with false starts, and downright irritating. This visual shows the sprawl of the government innovation ecosystem. If you are at all confused about how the innovation entities discussed this post relate to one another, refer back to this graphic as a helpful guide.
I am writing the The Acquisitions Co. Field Guide primarily to help shrink the gap between the public and private sectors.
For most startups, working with government is all about doing the research to understand the challenges the government is facing, then identifying the constellation of paths to government that might work for your startup. I’ve had the privilege of speaking with subject matter experts and practitioners across federal government, DoD, academia, national labs, and startups. I’ve distilled their approaches and guidance on working with government into The Acquisitions Co. Field Guide.
I’ll refer to the Field Guide throughout this post. That said, the Guide itself is paywalled. To access it, please pick any tier and sign up as a paid subscriber for Alohomora. Once subscribed, you’ll receive access to the Field Guide within a day. This format allows me to run my Notion paywall through Substack. The newsletter will remain free, the Field Guide is what you’re paying for by subscribing!
✨ Check the Field Guide out HERE, once subscribed! 💥
If you don’t sign up to access the Field Guide…
This post should still prove valuable to you! It builds upon my previous post, Demystifying the Federal Sale.
You can still connect with other founders and operators navigating the process of working with government if you join The Acquisitions Co. community on Slack! Please join only if you are a founder or employee at an early-stage company that is working with, or plans to work with government.
Operating Notes
This newsletter is intended to be read alongside the Field Guide, a resource-rich, tactical guide to government. The headings below correspond with categories in the Field Guide. Most categories include a representative sampling of relevant entities, rather than an exhaustive list. If you think a category or company is missing, please comment or reach out.
🌊 Let’s Dive In!
Today’s Tailwinds
There are numerous tailwinds enhancing a company’s ability to work with the government today - a large amount of government funding is being made available to companies and research institutions via the Inflation Reduction Act, CHIPS Act, and the multi-billion annual budget the SBIR/STTR program offers for R&D. In parallel, investors are increasingly open to funding companies that view the government as a key, counter-cyclical customer.
Institutional Investors
In this post, we view institutional investors as independent venture capitalists that make investments in private companies in exchange for equity. The investors listed in the Field Guide have dedicated significant resources to supporting defense technology companies.
Corporate Venture Capital (CVC) / System Integrator Investors
In this post, we view system integrators as largely incumbent companies that have historically been trusted development, operations, and maintenance providers for the government (Lockheed, Booz Allen, etc.). Many of these firms are keen to learn about new technologies and approaches, and many have internal investment arms. To the broader investment community, these firms are generally considered corporate venture capital firms.
These investors are particularly helpful as the system integrators they represent will often have large (hundreds of millions of dollars) government contracts like programs of record or indefinite delivery / indefinite quantity (IDIQ) contracts already in place). Startups can partner with system integrators to get in on these programs.
Accelerators & Government Innovation Entities
This category of companies offer services custom-tuned to a specific market. In-Q-Tel helps startup companies connect to the Intelligence Community, DIU helps startups connect to the DoD, and DCode offers a platform, resources, and investment that help startups connect to the government.
Small Business Innovation Research (SBIR) / Small Business Technology Transfer (STTR) Programs
SBIRs and STTRs provide competitive, awards-based grants to small businesses and research institutions sponsored by a federal agency to expand R&D and innovation. 11 federal agencies participate in the SBIR program. 5 federal agencies currently participate in the STTR program. STTRs are similar to SBIRs, but require businesses to partner with research institutions. More than 11 groups offer opportunities, however because DoD, for example, consists of multiple sub-groups (Air Force, Army, etc.) that run separate SBIR programs with varied processes. The Field Guide does not contain an exhaustive list of SBIR opportunities, but it does cover a representative set.
If you’re looking for agency-specific breakdowns of SBIR opportunities, the SBIR.gov “Agency Introductions” website is a good place to start.
Also note some agencies provide grants, some provide contracts, and others offer both. SBIR grants vs. contracts has more on this topic. To paraphrase the post: Grants tend to be flexible, fund work that advances a national objective, and are shaped significantly by the applicant. Contracts are binding vehicles in which goods are exchanged between a buyer (government) and a seller (startup) for compensation.
Some SBIRs seek specific solutions to a problem, others are “open topics,” a mechanism developed by the Air Force in 2018 to allow small businesses and research institutions to surface technologies and tools the government didn’t think to ask for, but could find useful. A benefit of the SBIR/STTR program is sole source authority, which means once you win a Phase I, the government can work with you directly for a particular capability going forward.
Typically, SBIRs are divided into three phases:
Discovery / Feasibility - Establish technical merit and commercial potential, and seek a partner to work with for Phase II (often need a Customer Memorandum and Letter(s) of Support) to apply to a Phase II. Awards range from $50k to $250k.
Prototype development – R&D to determine if the company solution will meet the government’s needs. This phase is focused on technical merit and commercial potential. Awards range from $750k-$1.3M.
Commercialization and Procurement - Funds work that extends or completes work done under prior SBIR/STTR agreements. Funding is external (not from SBIR/STTR).
A note on the SBIR Program
Though the SBIR program has bolstered innovation, it is not without its challenges.
had a great illustration of some of the SBIR program's difficulties - the power law at work (!) - in his excellent newsletter, .
Small Business Innovation Research (SBIR) / Small Business Technology Transfer (STTR) Consultants
In this post, we view SBIR / STTR Consultants as the consultants early-stage companies pay (typically a monthly fee + a % of SBIR / STTR award won) to help them craft their applications and find government end users.
A note on working with the various agencies in the context of SBIR / STTR
Every agency is unique. The Air Force stands out as a forward-leaning service (with software factories all over the country, as you can see below). Air Force tends to value venture funding, for example, more than NSF might, as NSF places a significant premium on R&D, and is known for funding people and projects at the inception phase. There are dozens of nuances about each agency, and as the applicant, it is your job to familiarize with them.
Federal Recruiters
You may choose to hire a federal salesperson in-house to build your federal strategy and secure federal contracts. If you take this route, your federal leader should be broad enough to curate your federal strategy, but market-aligned enough with the part of government you’re prioritizing to have strong relationships and an understanding of a specific agency’s (or agencies) pain points. The recruiters listed in the Field Guide can help you find the right individual if you choose to hire for this role.
National Labs
There are 17 National Labs, all under the DOE’s purview - see the below visual from The State of the DOE National Labs, which captures all 17.
Defense Goldmines
Goldmines include highly helpful resources I’ve identified that can help startups navigate government like Defense Market Map by
, the Contracting Cone by Defense Acquisition University, and Defense Tech Playbook by Eliot Pence.Contracting Strategies
In this section, we cover the types of government contracts you can win as a startup. We dive into everything from the regulations governing acquisition (like the Federal Acquisition Regulation) to the mechanisms the government has to partner on and/or fund development of commercial technology. We explore strategies like Other Transactions (which seem to be increasing in popularity due to their (potential for) speed and flexibility), Cooperative Research and Development Agreements (CRADAs), Requests for Proposal (RFPs), and a dozen other avenues to connect with government. Most of these opportunities can be found on Sam.gov
Nuances to Keep in Mind
Know Your End Goal
This will help you (and your investors) plan and allocate resources, though the type of long-term contract available (if any) may not be immediately clear. Try to understand if there's potential for a recurring enterprise license at the end of the tunnel.
Determine Intent
Try to identify the nuance inherent in what the government is asking for. For example, requests for information (RFIs) and Sources Sought Notices are indicators that the government is doing market research - exploring the market in search of a company offering a novel solution or capability that may satisfy a mission need. If you respond to one of these opportunities, you may have the power to shape a future request for proposal (RFP).
As a startup, you need to identify what the government is prioritizing, and clarify how it measures success. A government entity engaged in market research may lead to a very different outcome than a government entity in urgent search of a mission-critical solution!
Technology Readiness
Government thinks of technology development in terms of “technology readiness level” (TRL). The bottom half of the below graphic offers a helpful heuristic that aligns TRL with company stage. The top half of the graphic is DOE-specific, so may differ based on the agency you’re working with, but is still somewhat representative.
Thank you for reading and for your support!
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Finally, creating The Acquisitions Co. was a learning journey for me. There are sure to be inaccuracies or imperfections. If you see any, please comment or reach out. 🤍
Awesome post!