The Department of Defense (DoD) and the U.S. Small Business Administration (SBA) have announced the approval of the first group of Small Business Investment Company (SBIC) Licensees and Green Light Approved investment funds under the Small Business Investment Company Critical Technology Initiative (SBICCT Initiative). This group aims to invest over $2.8 billion into more than 1,000 portfolio companies.
The SBICCT Initiative is designed to attract private investment in technology areas critical to economic and national security. Funds licensed under this initiative can access SBA guaranteed loans up to $175 million, through new Accrual Debentures or traditional SBA Standard Debentures, enhancing fund-level investment returns. The DoD also offers Program Related Initiatives to support these investments.
Launched by Secretary of Defense Lloyd Austin and SBA Administrator Isabel Casillas Guzman in December 2022, this partnership between DoD's Office of Strategic Capital (OSC) and SBA's Office of Investment and Innovation (OII) seeks to boost private investment in crucial technologies for U.S. interests.
Heidi Shyu, Under Secretary of Defense for Research and Engineering, stated: "This first group of SBICCT Initiative funds represents a consequential milestone in demonstrating the power of public-private partnerships...benefiting the development and commercialization of critical technologies that are key drivers of our U.S. industrial base."
Representatives from both agencies celebrated this achievement at the Hall of Heroes at the Pentagon.
"SBA and DoD entered into this historic initiative to ensure America maintains its global competitive edge," said SBA Administrator Isabella Casillas Guzman. "Today we are proud to recognize the early results...to fill capital access gaps vital to our national and economic security."
The SBICCT Initiative began accepting applications in fall 2023, with licenses granted starting July 2024. As of October 22, 2024, four funds are licensed and nine are Green Light Approved by SBA.
These 13 funds plan a combined investment exceeding $4 billion across nearly 1,700 portfolio companies focused on all 14 DoD Critical Technology Areas. They aim to cover various asset classes including seed, venture, growth, buyout, direct lending, special situations, and fund-of-funds.
Interest in the initiative is growing with over 100 funds expressing interest so far. Additional applications are expected before the next filing deadline on November 15, 2024.
