The Department of Defense (DoD) and the U.S. Small Business Administration (SBA) have announced the first cohort of funds licensed and approved under the Small Business Investment Company Critical Technologies Initiative (SBICCT Initiative). This initiative aims to enhance U.S. national and economic security by encouraging private investment in critical technology areas identified by the DoD.
The initial group of funds is expected to channel over $4 billion into more than 1700 portfolio companies. These companies are involved in all 14 critical technology areas, as well as strategic component technologies and production processes. The investment funds come from various regions across the United States, with offices in 15 states and Washington, D.C., planning to invest at different stages including seed, venture, growth, buyout, direct lending, special situations, and fund-of-funds.
To achieve "Green Light" status, these funds had to complete several steps: preparing a detailed application outlining their management team and investment strategy; undergoing operational and investment due diligence; participating in an interview with the SBA’s Investment Committee; and demonstrating their capability to manage a Small Business Investment Company (SBIC).
Once a fund receives a "Green Light Letter," it can begin raising private capital. Upon closing its initial tranche of private capital, the fund can apply for an SBIC license to access leverage for investing in portfolio companies. Seven funds from this first cohort are already fully licensed and have started investing.
Interest in the SBICCT Initiative remains high with over 100 funds expressing interest so far. The diligence process has begun for a second cohort of applicants ahead of the next filing deadline on March 31, 2025.
For further details on the SBICCT Initiative or application procedures, interested parties can consult the Investment Policy Statement or contact capitalmarkets@osc.mil for more information.
