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This American VC raises a $340M fund to invest in autonomous defence startups and more

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Photo Credit: Razor’s Edge Ventures

The future of defence aviation is autonomous. Recently Sheild AI joined the race and now Razor’s Edge, based in Reston, Virginia, and defence- and security-focused VC firm announced the closing of its third startup investment fund at under $340M. The firm investment indicates that national security technology is a safe bet even in difficult economic times.

According to the firm, it has surpassed its initial target of $250M and will target companies developing autonomous systems, space technologies, cybersecurity, AI and machine learning, digital signal processing, and other aerospace and defence technologies.

With the new funding, the firm’s total assets under management now exceed $600M. Razor’s Edge has delivered two initial public offerings and two significant M&A exits from its portfolio companies to investors in the last two years.

Given the moral ramifications and lengthy path to profitability, traditional venture firms frequently hesitate to invest in defence-focused startups. Before a government contractor in the United States receives its first contract, it usually takes at least 18 months of planning, and most contracts are given to incumbents. The gap between the R&D stage and the contract award must be filled by any startup that manages to get its foot in the door.

Early stage investments

In terms of early-stage investments, Razor’s Edge claims it focuses on businesses it thinks can develop into significant players in the defence and intelligence sectors before later diversifying into commercial enterprise verticals. Razor’s Edge provides advice on strategic business investments and “tuck-in” acquisitions for the more mature and later-stage prospects, which typically are businesses already engaged in work with the US government.

Razor’s Edge, a multistage startup funding firm founded in 2010 by Jack Kerrigan, Mark Spoto, Peggy Styer, Richard Moxley, Steve Pann, focuses on projects that “[help] national security community [members] solve difficult technology problems and advance critical missions,” according to its own statements. 

“Our third fund will continue the approach we have successfully applied since the beginning. The US faces an increasingly complex and rapidly growing national security threat environment. We work diligently across our portfolio to help our customers solve the hardest problems and maintain a technological advantage over near peer adversaries,” said Peggy Styer, Co-Founder and Managing Partner.

“Our laser focus on supporting elite customer missions and obsession with building innovative cultures attract exceptional founders to the firm and drive a high volume of deal flow,” noted Jack Kerrigan, Co-Founder and Managing Partner. “We have already completed five new investments in 2022.”

“We have a fantastic group of new and long-standing investors and want to thank them for their commitment to Razor’s Edge,” said Mark Spoto, Co-Founder and Managing Partner. “The fact that this fund significantly exceeded our initial target speaks to the trust our investors have in the team and the enthusiasm they have in our ability to deliver venture capital returns while leveraging our operating experience to hedge against risk.”

Competitors

Razor’s Edge will face competition from both new and established competitors, including Booz Allen Hamilton’s recently launched $100M corporate venture arm, Booz Allen Ventures, and Shield Capital, a firm with Defense Department ties. Other competitors include Lockheed Martin Ventures and HorizonX, which will be spun off from Boeing in August 2021.

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