An investment exit by sale to a military contractor or aerospace company has been off the radar screen of VCs for a long time. Via Intel Dump, here's a WaPo story on a trend toward growth through acquisition by defense firms, particularly targeting IT and systems integration skills that are becoming more valuable in a 'transformation' environment. For updates on DC area mergers that often relate to defense, check here.

Don't get too excited yet, though. Looking through a few deals with disclosed sales, earnings and valutions comes up with a range around 1.0 - 1.5 price to trailing sales for companies in the mid-$10m top line range in the integrator and network areas. Hard to exit that way in the venture model, considering the lead time to achieve substantial sales in the defense industry. FWIW, specialist i-banking firms in this area include Quarterdeck and Houlihan, Lokey.
4:36:45 PM    

If you're playing the futurist (or early stage VC) games, you spend a fair amount of time 'filter feeding' in the data flow, trying to find the early traces of new trends, or emerging drivers of technical or business change. It's usually the sum of little things that pushes a trend or driver over the awareness threshold. I'm hardly the first to say this, but I'm wondering if we're seeing the reemergence of space as a technology driver, fueled by an arms race in both the original and business senses of the phrase. Some bits and pieces from hither and yon:

• RHIT the Chinese are headed for both manned orbit and the Moon. Good way to get the competitive juices flowing. (Though why have a race when you'll be second if you win? Think bigger, Beijing!)
• Japan has quietly developed some rather advanced space robotics capabilities, and one can think of a few current events to motivate investment in even more capable indigenous space technology.
• Glenn Reynolds' May 27 post (with followup) describes the nascent European Galileo project to compete with American GPS. Whether its frequency overlap with GPS is a matter of adversarial military or business strategy, or a technical need, is beyond me, but any one of those smells like a race. (Whether the EU can actually fund this when it can't maintain a modern military is another question.)
• Meanwhile the US military wants to be able to 'negate' the spy satellite and other space capabilities of potential adversaries and those who would help them. A coy word for what can only be an anti-satellite program.
• The U.S. military has bought up the output of civilian recon satellites, has exerted some types of shutter control, and might be in the early stages of formulating policy on spread of the technology.
• Meanwhile, on the NASA front, the failure of the shuttle program is evident. We have an over-complex system designed for political ends, that is more expensive to operate than what it replaced, has no meaningful learning curve, and kills its pilots about 2% of the time. Time to send NASA back to the technology funding and pure exploration role.
• I think you could say the market for space tourism is now a proven concept, though its size is unknown. Things like the X Prize will keep this area bubbling.
• The most interesting domestic developments are commercial efforts like the Falcon, which was specifically designed to take advantage of, and sustain, a cost learning curve for a low end lifter. (Hat tip to Stefan Smalla). Makes lots of business sense, though it's a double edged sword: it may further undermine the economics of some government subsidized lifter programs and reduce the barriers to entry to those private or national actors that would like their own spysat or other orbital fleets. (Explicit disclaimer: we are not looking for launcher biz plans.)
• Seems DARPA agrees with this analysis, because they have their Orbital Express program, with cheap aircraft borne lifter. (A pretty 1.5mb PDF here.)

To shift metaphors, this isn't a fire yet, but there are a few wisps of smoke. Stay tuned.
2:19:11 PM    

Jeff Jarvis pulls together the elements of a very doable and worthwhile task: bootstrapping an Internet and particularly, a blog culture, for Iraq. As pointed out in the comments, much of what is described could easily be done with outdated inventory, or even fully depreciated machines.

The Instapundit has already linked this one, but I'd like to see it spreading into the business and tech blogs. Somewhere out there is at least one company that could be front and center as the Iraqi (and maybe Middle East) markets and society change forever, and someone working there who can make it happen. You?
10:02:44 AM