Washington Business Journal – Amplifier eyes $20M federal tech fund

From the Washington Business Journal :http://www.bizjournals.com/washington/print-edition/2012/09/28/amplifier- eyes-20m-federal-tech-fund.html

[download id=”18″]

Amplifier eyes $20M federal tech fund Premium content from Washington Business Journal by Bill Flook, Staff Reporter

Date: Friday, September 28, 2012, 6:00am EDT

Bill Flook

Staff Reporter- Washington Business Journal Email | Twitter

A Virginia venture capitalist and a serial government contracting entrepreneur are raising a $20 million fund that would fuel startups built off federally funded technology.

Amplifier Venture Partners II LP, in many ways, represents a contrarian bet to much of the region’s venture market. But to managing directors Jonathan Aberman and Ed Bersoff, the fund is a natural fit for D.C., one that capitalizes on the region’s true strength: the proximity to federal agencies and labs generating research ripe for commercialization, as well as proximity to potential customers and acquirers for the startups they fund.

“Until relatively recently, the conditions for the success of a fund like this were not obvious,” said Aberman.

The duo, now in the early stages of raising capital, are banking on a confluence of forces. University tech transfer offices — including those in the Washington region — are feeling stepped-up pressure to license more research to startups. The federal government has the same mandate; last year, President Barack Obama issued a governmentwide memo calling on agencies to streamline the commercialization process and put more federal research in the hands of entrepreneurs. The mass-market applications of federal R&D are becoming more tangible. The Siri personal assistant software that launched in the Apple iPhone 4S originated with the Pentagon’s Defense Advanced Research Projects Agency, or DARPA.

That opportunity, however, has been overshadowed by the explosion of consumer Internet startups in recent years, glamorizing the image of a young software entrepreneur standing up a social media business from a weekend’s worth of coding. This fund represents the diametric opposite of that image.

page1image18312 page1image18744 page1image18904 page1image19064 page1image19224 page1image19384 page1image19544

http://www.bizjournals.com/washington/print-edition/2012/09/28/amplifier-eyes-20m-fede… 9/28/2012

Amplifier eyes $20M federal tech fund – Washington Business Journal Page 2 of 2

“It’s about real technology being developed and commercialized and sold,” Bersoff said. “There’s no hype here, there’s no smoke and mirrors, it’s real stuff. That means it’s harder.”

For now, Aberman’s and Bersoff’s challenge lies in convincing limited partners of their vision, with the hope that their experience and relationships will instill confidence in a less well- worn strategy. Aberman is founder and managing director of McLean-based Amplifier Venture Partners, which saw its first significant exit in January with Constant Contact Inc.’s acquisition of Boston-based CardStar Inc. Bersoff is the founder and former CEO of BTG Inc. and ATS Corp., two federal information technology contractors. He was also the first chairman of the Northern Virginia Technology Council.

The two plan to invest in a mix of stages and sectors, with a focus on cybersecurity, “big data” and human-computer interaction technologies. In some cases, they plan to match experienced entrepreneurs with a federally funded technology. In others, they would fund existing startups — those that have already won Small Business Innovation Research (SBIR) funding but need an additional infusion of Series A or expansion capital.

Startups that get funded still face a “valley of death” in securing institutional funding post- SBIR, said Christine Villa, chief technology officer of Fairfax-based BRTRC Inc. and a consultant to the Defense Department on the SBIR program.

Those companies tend to be looking for a few million dollars to take a working prototype through the next level of research and initial production. Amplifier’s planned new fund, therefore, could be attractive to those entrepreneurs, Villa said.

Bill Flook covers technology, biotech and venture capital.