Accessing Non-Dilutive Funding

Accessing Non-Dilutive Funding

We’ve come to talk about tech and non-dilutive funding. How are these two connected when they are essentially two entirely different fields? 

Tune in to this Startup Hustle episode with Lauren Conaway and Helena Krusec to find out.

Helena is the deputy engagement lead of AFWERX (AF Ventures); she’s here to discuss dual-use tech and accessing non-dilutive funding. Let’s learn how you can bring innovative products to the military and your target market’s radar.

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Covered In This Episode

A young Helena Krusec once dreamed of being a fighter pilot. Although it didn’t take off as expected, she is now working on helping the military with innovative technologies. And she is assisting entrepreneurs in gaining access to non-dilutive funding. It’s a plot twist, but she is still living her dream.

But what is non-dilutive funding? How can small business owners secure it? And what kind of technologies are often requisitioned by the armed forces of the US? Here are the discussion points between our host, Lauren, and her guest.

  • Helena’s journey from being a young dreamer to where she is now
  • What is non-dilutive funding and its significance to small business owners
  • How AFWERX helps underserved entrepreneurs gain access to non-dilutive funding
  • What innovative technology should you pitch to military sectors
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Highlights

  • Dual-use technologies (10:01)
  • How the military and the private sector work cohesively (12:31)
  • Innovation research funding (19:00)
  • Non-dilutive funding (25:00)

Key Quotes

The type of technology and the speed of technology adoption are two different things. Definitely not even comparable in terms of the technology that we have now, right? Because the technology in your smartphone is probably smarter than some of the first rocket ships that went up to the moon and took us to the moon landing.

When we’re working with small businesses, we’re not trying to seed 100,000 new defense primes. We are trying to help steer the American economy to create stronger, better, healthier small businesses. [Businesses] that can grow and thrive regardless of whether or not they have government customers or commercial customers.

But by coming to them and finding different pockets around the United States where we need to show up, create opportunity, and make the barriers to entry less monumental for small businesses. One of the things that I’m incredibly passionate about is making sure that we’re working with underserved populations.

Want to know how to access non-dilutive funding and gain an audience with your biggest target customers, even as a small business? Get ready for take-off by listening in on today’s Startup Hustle episode, “Accessing Non-Dilutive Funding.”

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Rough Transcript

The following is an auto-generated text transcript of this episode.

00:00.41

Lauren Conaway

And we are back. Thank you for joining us for yet another episode of the Startup Hustle podcast. I’m your host, Lauren Conaway, founder and CEO of InnovateHER KC. And we are excited about today’s episode sponsor. Today’s episode is sponsored by Universal Registered Agents. Do you know what they do? They make it easy for entrepreneurs to get their companies started the right way. If you are thinking about starting a new business or expanding a current one, it is so important to get it set up and maintained properly. It sets the tone for your entire business. You’re in compliance. That is exactly what the folks at Universal Registered Agents do. If you are looking and interested in learning about the differences between LLC, S-corp, C-corp, and nonprofits and which one will work for you, it is not a problem. They’re going to help you out; they do the legwork for you. To learn more, click the Universal Registered Agents link in the show notes and definitely check them out. Now, I have to tell you that today’s guest, I’m really excited. I feel like I have not interviewed a guest quite like the one we have for you today. So we should be having a pretty interesting conversation. But today, we are joined by Helena Krusec, she is the deputy engagement lead of ventures for AFWERX. Helena, thank you so much for being here with us today. I got to tell you. I am so excited because Jessica Powell, who, for those of you listening who don’t know Jessica, is one of the producers of the show. She is a Startup Hustle rockstar.

01:27.66

Helena Krusec

Hi, Lauren. Thanks so much for having me.

01:44.53

Lauren Conaway

She makes all of this stuff happen. She’s the wizard behind the curtain who pulls all the levers to make Startup Hustle happen. And she has recommended you so highly, Helena. I don’t think you know how big of a fan you have in Jessica Powell.

01:57.69

Helena Krusec

Oh, my lord. That’s, you know, no pressure, right.

02:02.36

Lauren Conaway

I mean, a little bit of pressure. But I feel like we’re gonna set the bar way up high. And then you’re gonna clear it based on what I know of you already. So I wouldn’t worry about it too much.

02:09.65

Helena Krusec

Yeah, well, hopefully. Well, I hope I can do her justice. Jessica is a great friend. We used to work together, and you know, always open to her recommendation. I’m so happy to be here.

02:22.40

Lauren Conaway

I have to tell you that I’m always open to her recommendation anytime she sends me a guest. She’s like, you’re gonna love this one. I’m like, yes, I am gonna love this one. And that was definitely you, so welcome to the show. I’m gonna kick us off, and I’m gonna ask you the perennial question.

02:29.80

Helena Krusec

Yeah, to form the west.

02:39.82

Lauren Conaway

Helena, tell us about your journey.

02:40.97

Helena Krusec

All right. So there’s a long version and a short version. The short version is that I probably have a little bit of imposter syndrome and that I stumbled my way into some really cool stuff.

02:46.60

Lauren Conaway

Yeah, we got time, we got time.

03:00.90

Helena Krusec

But the long version is that I’ve actually been working really hard to get here for a long time. It sort of depends on how far you want to go back. When I was a little kid, I felt like most little girls wanted to play with stereotypically feminine things.

03:14.94

Lauren Conaway

Give us all the barbies.

03:17.41

Helena Krusec

A board, some playhouse, and whatever. All those gender stereotypes. I wanted to be a fighter pilot when I was a little girl. I desperately want to fly planes. I’m sure, at some point, it did because I’m a kid from the 90s. But at the time that movie was out, I’m sure it wasn’t super.

03:22.70

Lauren Conaway

Oh, that’s awesome. Wait. Did it have anything to do with Top Gun?

03:35.50

Lauren Conaway

Okay.

03:37.23

Helena Krusec

On my radar. So I probably saw it and just absorbed it into my childhood zeitgeist at some point in time. But, maybe, who knows.

03:43.36

Lauren Conaway

Okay, I just wanted to check. I feel like that would have been. So you wanted to be a fighter pilot. What appealed to you?

03:49.22

Helena Krusec

I did, and now that I’m really thinking about it, I think the earliest movie I can remember where I saw depictions of fighter pilots was in the early 2000s, like Independence Day movie with Will Smith. We won’t go with that. Well.

04:04.14

Lauren Conaway

That is one of my favorites. It is one of my favorite movies of all time. I’d like, no shame, like I understand that it does not hold up like crazy well, at this point, but like one of my favorite movies of all time. I love it.

04:18.37

Helena Krusec

Yeah, totally, you know, just a lot of home. Especially for a, you know, 90’s kid, definitely. So, you know, jumping forward, that definitely stuck with me. And for a long time, I debated what it was that I wanted to do with my life. I ended up not going into the military.

04:23.29

Lauren Conaway

Oh, yeah.

04:35.31

Helena Krusec

I ended up eventually going into a public policy program. From there, one of my first big jobs out of graduate school was working for a consulting firm that did a lot of work in the national security space. So they worked with a lot of clients, like big prime contractors. So Department of Defense and Department of Homeland Security agencies. And a lot of folks are looking to just do new things and get noticed in the political sphere.

05:02.75

Lauren Conaway

Yeah.

05:11.57

Helena Krusec

One of my first big clients was an individual out of the Pentagon who was interested in figuring out how some hackers out of the startup community and Washington, not in Washington, DC, out of Las Vegas were thinking about the black hat Defcon conference shout out. They were leveraging different hacking tools too.

05:25.90

Lauren Conaway

Perfect.

05:31.26

Helena Krusec

Become better than the government was at doing all things cyber, and though I chaperoned a big group of folks out of the Pentagon to that event and helped them get connected with a company that I eventually helped to get plugged into a contract with them, called ARI security.

05:33.30

Lauren Conaway

Yeah.

05:47.78

Helena Krusec

Um, that focused on, really? Ah, what was the world that he called identifying the hidden tigers in the organization, right? So helping to train cyber warriors offensively and defensively with hacker tools at the Pentagon level. And that was the first time I ever really saw how a startup could play ball with a big organization like the Department of Defense. Around that same time, I also got invited to ah, the end of my graduate career. I got invited to present on a topic at the Pentagon about the force of the future. So.

06:10.84

Lauren Conaway

Yeah, yeah.

06:24.14

Helena Krusec

Ah, future of Warfighting, right? I did a lot of my graduate research around um cybersecurity in the future of warfare in the Cyber Era, and I got to give that presentation to a room full of really important military folks, most of whom I had no idea they were. Um, you know I was this kid who came from undergrad from a state school, and there were all these other kids with, ah, I say kids. But we were all young adults. You know I am in league education, and you know I felt such an imposter syndrome, but I remember, in that room, I got a chance.

06:47.77

Lauren Conaway

Yeah, oh, for sure.

06:57.74

Helena Krusec

To meet Chris Lynch, who was the guy who eventually founded defense digital, and his entire mission statement was exactly what I was working on, which was the fact that the government needed to learn how to move faster and be more agile like startups in the hacker community. So um.

07:11.91

Lauren Conaway

Yes.

07:15.90

Helena Krusec

That was where I really got excited about this work, and you know, lots of twisty turvy roads, but eventually found my way into venture capital where I worked for the last four or five years. and then eventually transitioned my way over to the air force where I’m currently a civilian working with AFVentures. So eventually made it back into the air force, not flying planes, but you know, close enough helping people to successfully fly those planes, I hope.

07:38.95

Lauren Conaway

Yeah, well, so that is, that’s so fascinating to me because I guess I feel like when it comes to the military, I feel like there is a. There are two schools of thought that you can follow. So, first of all, like when I think of the military, I don’t necessarily think of innovation. I think of, you know, discipline, and I think of order, and I think, you know, I think there are images that are conjured up for sure, but innovation is not typically one of them. How. I also know that some of our greatest innovations have come through the military, you know, particularly as it pertains to defense. Like a lot of the technologies that we use now today were actually developed for the military, and so I’m really.

08:27.22

Helena Krusec

Yes.

08:30.33

Lauren Conaway

Interested to hear how, historically, the military had a difficult time innovating or what’s your take on that.

08:38.56

Helena Krusec

That’s a super interesting concept, and I think it sort of depends on how you’re measuring that concept of innovation at any one point in time, right? So if you are looking at what was done in. You know the 1960s versus what’s happening today. Right? The type of technology and the speed of technology adoption are two totally different things. Definitely not even comparable in terms of the technology that we have now, right? Because the technology in your smartphone is probably smarter than some of the first rocket ships that went up to the moon, and took us to the moon landing.

08:56.85

Lauren Conaway

Yes, thanks.

09:04.54

Lauren Conaway

Right.

09:13.80

Lauren Conaway

Which in and of itself is just like you just made a mind-blowing statement like I Just want you to know that. 

09:15.27

Helena Krusec

Those people at home, I know it’s crazy. But it’s um, it’s super interesting also to think about the fact that out of that time period is where we got things as basic as you know, a duct tape and microwaves. Those were things that came out of NASA and the US government.

09:32.79

Lauren Conaway

Yeah.

09:34.66

Helena Krusec

Right? Those got translated into the commercial space into the American economy, and what’s really cool about that is that I think it translates well into what we’re doing right now, at least one of the things that the air force is pretty well known for at this point in time is. Our willingness and excitement around working with dual-use technologies, dual-use for those who aren’t aware, is essentially the concept that technology or some product has applicability in the defense space as well as the commercial space. It’s not just one or the other, right.

10:05.75

Lauren Conaway

Sure.

10:10.37

Helena Krusec

Um, so as silly as it is, Duct tape is a perfect example of that because, absolutely like the adhesives used, the word duct tape has a very explicit amount. Yes.

10:12.81

Lauren Conaway

Yeah, oh my gosh, and I mean duct tape is that tool that you think of when you’re thinking about absolute utility like everybody can find a million different uses for duct tape.

10:22.52

Helena Krusec

Yes, yeah, it’s a very, um, no dud type example, but I like that one because it’s so ubiquitous that you don’t even really think about it, right? And the goal of the air force.

10:35.80

Lauren Conaway

Yeah.

10:40.47

Helena Krusec

Working to support these dual-use companies is not just trying to find the next big defense contractor, right? When we’re working with small businesses, we’re not trying to seed 100,000 new defense primes. We are trying to help steer the American economy to create stronger, better, healthier small businesses. [Businesses] that can grow and thrive regardless of whether or not they have government customers or commercial customers.

10:52.90

Lauren Conaway

Right? Yes.

10:58.90

Helena Krusec

Typically we prefer that they have some of both, right? If we’re going to have the same kind of um, you know, innovation.

11:07.62

Lauren Conaway

So right.

11:15.37

Helena Krusec

The mindset that people think of when you’re thinking about the end of the cold war. We’re not going to do that unless we’re putting in more money into these dual-use type companies, and that is one thing that I think we at the air force have done really well is acknowledging what we don’t know.

11:21.13

Lauren Conaway

Right.

11:30.49

Helena Krusec

And opening it up to the industry to tell us what we need to know and where we need to do better.

11:32.76

Lauren Conaway

Yeah, well, so first things first, I do want to tell you that the air force is my favorite branch of the military. I had a grandfather who served and earned the rank of major, and you know, very proud and so love the air force, but I really what? I really love the fact that your organization AFWERX and the work that you do empowers those small businesses, those entrepreneurs, and people who are already thinking entrepreneurially and thinking. Azure file, as you said, you know entrepreneurs typically because they’re helping small companies, and they’re not beholden to a lot of different parties. They can be very quick, and they can fail fast, and they solve problems, and so I love the fact that you are empowering the private sector to serve both. The military sector and the public sector like that are super cool. So can you talk a little bit about that interplay, like how that relationship manifests?

12:36.19

Helena Krusec

So how do I want to make sure I understand your question?

12:38.37

Lauren Conaway

How are the military and the private sector working together cohesively?

12:44.44

Helena Krusec

Oh man, I mean there’s the ideal scenario, and then there’s, you know, everything is different from theory to practice, right? So yes, so what? Well, this is an.

12:52.30

Lauren Conaway

All right? Well, so let’s hear the theory, and then let’s hear the actuality. I’m really interested. I’m fascinated by this. I can’t wait.

13:02.95

Helena Krusec

Yeah, this is something that people talk about at a policymaking level all the time, right? You know there are constant disagreements regardless of side about how to make this work. But I think the goal that everyone wants to see um is a strong American economy that works in lockstep with the government right. We want to be seeing companies that are successfully putting out new cutting-edge technologies that are being fielded by the US government as well as private sector entities. So, in theory, all of those things should be working well in lockstep from the get-go. Ah, the reality is that I think that we as an organization have acknowledged that it can be very difficult to work with the government, especially the air force and the military in general. Um, at least for a small business in that context, let me contextualize it in that way. A lot of folks look at the military and see it like this as this behemoth where there is no space for small businesses to get a leg in, especially in the context of how ah defense contractors have operated right for the last 40 or so years, it’s really been a.

14:13.68

Lauren Conaway

Right.

14:16.64

Helena Krusec

Monopoly on large businesses coming in and taking up large sums of money, so I can see from a small business perspective. They don’t really seem like there is space for what we call a small small business to come in and do something meaningful for the military. Um, so one of the things that.

14:30.77

Lauren Conaway

Right.

14:34.74

Helena Krusec

We try to do our programs under. So I worked with AF ventures, and we’re a division of AFWERX, which is the Department of the Air Force’s front door for all things non-dilutive funding. Please stop me if I do this. I try so hard not to because I’m a civilian, and I have to acknowledge that even I don’t know all the acronyms. But if I smoke one thing and I get acronymy or jargony like yell at me because I hated when that happened.

14:57.68

Lauren Conaway

Well, I don’t know that I’m going to yell at you, but I will stop you because that is another thing that I definitely think of what I think of the military like anytime I talk to somebody who’s involved with the military like they start throwing letters at me and I’m just like ah we’re doing alphabet talk again. Excellent.

15:13.14

Helena Krusec

You know it’s ah, I get it because there are so many big Concepts and important things that we’re discussing that it can work a lot faster to speak in acronyms. But for the sake of equal transparency and understanding.

15:14.54

Lauren Conaway

So I will stop you, and I promise not to yell.

15:22.42

Lauren Conaway

Sure totally get it.

15:31.54

Helena Krusec

And creating an environment where people feel as though they understand what we’re talking about, I think it’s fair to everyone to stop and explain anything. So I’m always more than happy to go back and tell you an acronym, and actually, a lot of times. There are even acronyms I don’t know, so I don’t like it happening.

15:46.68

Lauren Conaway

All right? Well, this is a safe space. To continue, and I will stop you where needed.

15:49.38

Helena Krusec

We have a lot of ane. This is the same space. Absolutely okay, so AF Ventures, we are the Department of the Air Force. The DAFF’s front door for all things affiliated with the small business administration. So the major mechanisms through which. Small business administration works for small businesses through really two projects. Um, SBIR, which is the small business innovation research grant, and then STTR, which is, I believe, science and technology transfer. Na shoot. There’s an r in there I can’t remember. You see, not everyone knows what all their acronyms are, but silver and sitter are the two main mechanisms by which small businesses can engage with the Department of the Air Force, and under our umbrella, we administer and direct funding for all of those. Um, research projects that are looking to get involved with the air force, be that silver is that sitter, as I just mentioned, or some of our bigger funding opportunities which some folks on the call if they’re more plugged into the defense ecosystem. There’s been a lot of buzz recently about these topics called stratify and tack. These are essentially bigger funding mechanisms that the air force leverages to place bigger bets, larger dollar amounts on things that they think can basically have a better chance at transitioning, so I got to go back to my acronyms. Stratify is a strategic financing tactic.

17:09.86

Lauren Conaway

Transition. Okay.

17:17.57

Lauren Conaway

Okay.

17:18.56

Helena Krusec

Tactical financing and those are all elemental funding programs. So they’re basically additional bigger buckets of money to help people finalize their prototype and get it to market and by Market I.

17:26.47

Lauren Conaway

Now you know, and I’m going to make a challenge to our listeners right now. At some point, I want you to try to use stratify or tackify in a sentence with somebody. And it lets normalize this conversation. But that’s your challenge, listeners, and I’m going to do it too. I’m going to try to use that in a sentence, all right.

17:45.89

Helena Krusec

You know I’m sure you could. I’m sure you could come up with some kind of analogy for, like, you know, leveling up, get your strat buying it. But um, you know, the context probably doesn’t translate super Well, so topologies to anyone playing that game. You’re gonna have a hard time.

17:58.50

Lauren Conaway

Fair It’s a challenge if it were easy. It would just be mundane, all right. So continue.

18:04.38

Helena Krusec

Um, absolutely yes, but the point being yeah, the point is just bringing it back. The point of those programs is to create explicit avenues through which to commercialize. Use cases and defense use cases across the startup ecosystem can get plugged into the sort of entry front door of the government contracting with the air force, and that’s what our team manages.

18:22.57

Lauren Conaway

Yeah.

18:29.36

Lauren Conaway

Okay, so that is a whole lot to chew on, so I’m gonna let’s try to parse it down. So one of the things that I would like to ask is if you have an organization or a startup that is building something that could potentially. Ah, fit within this dual-use paradigm that you’re talking about, what does the experience from the entrepreneurship side of things look like as they seek to work with AFWERX as they seek to find this innovation research funding.

19:03.46

Helena Krusec

Sure, so ah one where I like to start with this, particularly for folks who’ve never done any business with the government, is to think about revenue and raising funds. The perspective of the traditional venture capital space is right. When you are a startup, The first thing that everyone tells you is that you need to go out and raise funding. They’re encouraging you to go ship a product, build it, find product-market fit and then find investors who will give you, um, you know, incremental amounts of money to go out and make a perfect product in theory. Um, the way that they do that is typically through dilutive funding, right? So when you are taking money from an institutional investor. They’re asking for some piece of your company back in exchange that is dilutive, right? It dilutes the ownership of your company. Ah, your founding team and your shareholders. That is absolutely one way to build a business if it works. I come out of the VC community. I’ve seen a ton of really strong companies. Build fantastic legacies that way. Absolutely I’ve also seen people build really strong companies, never having to take a dollar of venture capital funding.

19:59.97

Lauren Conaway

Right.

20:19.18

Helena Krusec

And it really depends on your financing model, and a lot of people do that, and there are different ways to build a business, and that’s not the point of this conversation. What’s unique about the way that we work with companies is that we provide non-dilutive funding. That money is the money that comes out of CSiver and sitter pockets.

20:24.80

Lauren Conaway

Like this conversation. Yeah yeah.

20:36.85

Helena Krusec

Ah, it is non-dilutive funding, and it is essentially a contract and exchange for work. So what’s unique about that is that it allows people at earlier stages than you’d think to be able to figure out how to work with the air force at the earliest stages of phase one. It allows companies to really just focus. On ah building out a feasibility statement, right? I think people get kind of caught up in this idea that government contracting means, you know, hitting the ground running and delivering products immediately. That’s not necessarily the case. Um, the government is a well-informed customer who wants to make sure that what you’re building works.

20:57.96

Lauren Conaway

Yeah.

21:06.22

Lauren Conaway

Right.

21:16.60

Helena Krusec

With their needs. So when you are first winning a silver or a said or phase one award. You have a period of performance where you are just doing a feasibility study. You want to make sure that the thing that you want to build works for the customer internally. We give you that funding, and it doesn’t dilute your company whatsoever. It can be huge.

21:23.63

Lauren Conaway

Right.

21:32.73

Lauren Conaway

But

21:36.55

Helena Krusec

It’s by no means the end of the world, right? Like you’re not going to be able to retire on the small amount of money that comes in through a sixth phase one, but it’s a substantial amount of money to a small business that’s trying to figure out how to keep the lights on and if your product.

21:48.27

Lauren Conaway

Just yeah.

21:53.71

Helena Krusec

Is it a good fit for airmen or a guardian on the ground? The goal of the open topic is the contracting mechanism. We use it most predominantly to help figure out what that is and get it into the pipeline to figure out how to deliver it for the warfighter, and that’s how that works for phase one.

22:11.76

Lauren Conaway

So outside.

22:13.67

Helena Krusec

What happens like that is a larger and larger sequentially larger amount of money. Um, once you finish with your phase one, as I said, the goal of that is funding in exchange for that feasibility statement, and when you get to phase 2, the name of the game is figuring out a government customer. So in the context of Vc, this is your product-market fit when you have built your MVP. You have to make sure that the product you’re gonna ship is something that someone’s actually gonna buy and the entire purpose of that phase 2 is to identify a government customer.

22:33.45

Lauren Conaway

Right.

22:39.82

Lauren Conaway

Right.

22:47.91

Helena Krusec

And then work with them to build out a prototype that fits their needs. That’s a large amount of money, and again it’s non-dilutive funding. So it’s essentially a contract and exchange for and the service of building out that prototype.

22:50.42

Lauren Conaway

So yeah.

23:02.22

Helena Krusec

And what’s unique about that is that you now effectively are able to go through the process of phase one to phase 2. You have a brand new customer who is excited about your product because they worked with you and saw you build the thing, and it makes sense for them. So from a startup’s perspective, I mean. You know I can’t speak to everyone because there are different business models. There are different industries, verticals, and customers that look different across the board, but to me, that sounds like a pretty good deal if you’re trying to figure out who’s going to buy your product.

23:29.94

Lauren Conaway

Sure. So I just want to make sure that I’m tracking this correctly. So like so stage one is can we do it and then stage 2 is what will people be buying and will people buy it. Okay.

23:43.33

Helena Krusec

More or less correct.

23:47.14

Lauren Conaway

I’m just trying to break it down into simplistic terms, so real quick. I do need to break in because this is like this is fascinating to me. I’m very selfishly enjoying this conversation. I hope our listeners are too, but I also have to say just a quick reminder of today’s episode of Startup Hustle. It is sponsored by Universal Registered Agents, and you know they take the complications out of setting up your business and maintaining compliance. Those aren’t easy things, and we talk a lot around Startup Hustle about how to make an entrepreneur’s job easier. Well, you are it. It is really important to have expert help along the way to help you. You know, get started properly and do everything that you need to do to make sure that all your eyes are dotted in tease or Crossy. You can set your company up for success. That is exactly what you will find when you visit www.universalregisteredagents.com. They can help you with all of your business setup and maintenance needs. They can help you set up LLC, corporations, and nonprofits wherever you’re located, in addition to helping you create the right kind of an entity. [The site], www.universalregisteredagents.com, can also help with registered agent services. They offer a wide variety of corporate services, and they can help you meet the needs of independent directors. So definitely check them out. Folks, we are here with Helena Krusec with AFWERX, and we are talking about non-dilutive funding, particularly as it pertains to the military, and so I’m just fascinated by this process. Helena, I have to ask you. You know we might have some folks listening in our audience who they’re looking to connect with the military. They might have a product that they think could fit within the paradigm of what you’re looking for. So can you talk to us about some kind of case studies where there are? Entrepreneurs struggled in this process, and where they flourished.

25:39.19

Helena Krusec

And yeah, that’s a great question, and I mean, it’s difficult because there are so many small businesses that we’re working with at any point in time, you know there’s about 1500 plus different companies that at least we individually as the ah as the efforts organizations have helped to bring into the ribbons that are pipelines that experience through these mechanisms. So there is a vast array of different experiences. You know, ranging from you know one and done up through coming in succeeding.

26:03.42

Lauren Conaway

Now.

26:17.66

Helena Krusec

You know, deciding to become a strictly, you know government-focused organization and only working with defense customers and finding your niche in that space or alternatively go in the other direction doing some of each right going up through the ranks and working with one government customer and then finding another commercial customer, and you know. Companies have been very successful in doing that too. Ah, the most recent numbers I’ve seen is that we have 20 plus unicorns in the AFWERX portfolio of companies that have worked with the Department of the Air Force. There’s a broad range, right? That’s 1400 broadly that have worked with us.

26:44.45

Lauren Conaway

Wow! yeah.

26:53.36

Helena Krusec

At any stage, all the way up through 20 something plus unicorns so, there are a lot of different types of companies here. Um, but the one thing I will say, and the one thing I like to reemphasize is that people tend to forget that the US government and the military, in particular, are one of the biggest customers in the world.

26:58.70

Lauren Conaway

Sure.

27:10.65

Lauren Conaway

Right.

27:12.59

Helena Krusec

There is, luckily, a product-market fit for something that you have to offer to a government customer. Well, that is something that falls under what I am doing, and there are stipulations there, right? What’s unique about companies that fit into the AF Venture siversitter?

27:17.69

Lauren Conaway

Yeah.

27:32.24

Helena Krusec

Funding on this side of the house is that they have to do something very acronymic. It has to comply with something called RDTE, which stands for research development tests and evaluation. Basically, what that means is that you can’t bring a commercial off-the-shelf product to us and say here, buy this thing, and then we’ll say, oh, okay, that’s great.

27:47.96

Lauren Conaway

Great.

27:51.81

Helena Krusec

There has to be some component of novelty. The whole point of the prototype is developing something new, right? So in order to work with us. There has to be that satisfaction of research development test and or evaluation and what that means is there are a lot of businesses out there who do either.

27:57.18

Lauren Conaway

Yeah, start.

28:05.19

Lauren Conaway

Yeah.

28:11.69

Helena Krusec

Don’t have a product or the means right now to do something totally R and D focused, and they might have a really great commercial office shelf product. There are a lot of other ways to do business with the US government, right? You can go and look at it.

28:21.35

Lauren Conaway

Yeah.

28:25.42

Helena Krusec

Um, you know, requests for products and solicitations on Sam Gov all day long. You can find all kinds of requisition stuff. But even in the military, There are a lot of different ways of doing this business, right? The air force has its way of doing things. We really like the open topic. We’ve been doing specific topics very well, and stratify are both really exciting, and we’ve launched some big companies that way. It’s not just the air force. There are organizations within the army that are also working with small businesses. I was just on a panel today listening to some folks with the office of naval research talking about how.

28:53.84

Lauren Conaway

Yeah.

29:01.31

Helena Krusec

Unsexy Some of this stuff is, but there are a lot of really valuable contracting opportunities all across the armed services. So What’s good about this is that if something doesn’t necessarily fit within the umbrella of AFWERX, It doesn’t mean you should give up, it means you know, get smart. Do your homework. Do some reading and really understand your customer but know that there’s probably a good fit for it somewhere.

29:23.00

Lauren Conaway

Yeah, so somewhere down the line, and I think your point is well taken that you know that the military is one of the largest customers in the World. So I love that there. It seems like there are a lot of opportunities, and I imagine that there are some. Predeterminations that entrepreneurs may have around working with the military, but the fact is it sounds like you could do pretty much anything. I mean, you know, maybe like you, maybe the military wouldn’t have used the unicorn. You know, kitten t-shirts or something like that. But if you’re developing a technology Product. Can you probably find some aspect of it to fit? I love that. Um, so let me ask you this, I’m very curious. How do you find companies to work with?

30:03.49

Helena Krusec

Yeah, and.

30:12.44

Lauren Conaway

I Imagine that attraction is some of it, like they might approach you but do you actively and proactively go out and seek out the kinds of technologies that you’re looking for.

30:20.16

Helena Krusec

Absolutely and that’s one of the reasons why I have my job. One of the main parts of the engagement team with AFVentures is to figure out how we better engage with the industry, not just by asking them to come to us. But by coming to them and finding different pockets around the United States where we need to show up, create opportunity, and make the barriers to entry less monumental for small businesses. One of the things that I’m incredibly passionate about is making sure that we’re working with underserved populations.

30:46.39

Lauren Conaway

Yeah.

30:55.22

Helena Krusec

You know, historically, we have the military in the US. Overall our government has done a really good job of working with small businesses, but we haven’t always done a really good job of equity in, you know, working with businesses where there are founders of color women.

31:11.14

Lauren Conaway

Yeah, how did you know that was going to be 1 of my next questions? You must be psychic.

31:14.40

Helena Krusec

Different people like it because it’s important. I mean, this is the look. I mean, what we’re doing here is really a microcosm of the investment space in general, not just in the military. This is really across the board.

31:25.80

Lauren Conaway

Yeah, for sure.

31:31.88

Helena Krusec

Women and founders of color just are disproportionately underinvested, right? And so.

31:33.75

Lauren Conaway

Yeah, I well, and I mean the stat that I always throw out. I think the last time they tracked in 202020, something like 2.2% of Venture Capital funding went to women-funded businesses, and that number becomes even more dismal when you talk about it. Female founders of color. It was like point zero, six percent, or something ridiculously low like that. So yeah, like, the venture capital landscape has historically been abysmal when it comes to founding underrepresented founders. So it’s good to hear.

31:54.87

Helena Krusec

Yes.

32:06.89

Lauren Conaway

Ah, that the military has taken some strides to change that narrative. So what are some of the things that you do?

32:12.15

Helena Krusec

Yeah, so we’ve um, you know we’ve acknowledged that we all have room to do better, right? We do have small businesses run by women and people of color within the portfolio. But there’s always room to do better. So.

32:18.97

Lauren Conaway

Oh absolutely.

32:28.68

Lauren Conaway

Race first.

32:31.32

Helena Krusec

Part of our core strategy and 1 of the things that we are really passionate about in making sure that we are satisfying as we’re going out and interacting with the community is making sure that we are bringing ourselves to different communities, one that I’m looking at right now is this. Events that we do with the HBC community. We’ve got this collider coming up later in August, where we’re working with HBC use and various small businesses to help bring these opportunities directly to them. All of that stuff is super important, but another one that is really important is making sure that we are. Making our language more accessible and so something that is incredibly important in our work is doing this user experience research where we are working with different founders folks who have never done business with the government ever right.

33:06.75

Lauren Conaway

He asked.

33:19.86

Lauren Conaway

He asked just.

33:22.27

Helena Krusec

Getting their concerns, understanding why it is that you know they might have historically in the past decided not to work with us, and figuring out how we can simplify a lot of the Legalese around contracting because that is a huge barrier to entry I mean you know.

33:32.38

Lauren Conaway

Right? Absolutely.

33:38.91

Helena Krusec

I’d never done this before, and I wasn’t myself, and I looked at, you know, a 20-page solicitation that was all written in legally. I’d probably say that’s a little difficult, you know, so um, making sure that we’re understanding. People’s experiences work to streamline and lower those barriers to entry. You know, talking and making sure that there is equitable access to our programs and Opportunities. That’s incredibly important. But then also sometimes that means shutting up and listening and showing up where we need to be and figuring out how we can make connections and help, so it’s.

34:11.53

Lauren Conaway

Yeah.

34:14.28

Helena Krusec

Um, it is not an easy process by any means. There is no quick fix, but we absolutely have a dedicated team who is working very, very hard to help ensure that we are getting better access across different communities.

34:24.71

Lauren Conaway

Yeah, not just getting butts in the seats but getting, you know, getting the right butts and Seeds. That’s incredible. Well, so let me ask you this then? And we kind of touched on this a little bit, but I’m going to ask you to get super tactical with me. So. You have a startup founder, and they’re getting ready to pitch to AFWERX. What are you looking for specifically? How should they prepare for that pitch?

34:55.11

Helena Krusec

Yeah, so it’s um, ah, the analogy is not perfect, right? So let me just clarify when it comes to pitching. The VC Community does a lot of 1 to 1 pitches, right? You do your pitch deck, and you perfect your ten, you know.

35:08.41

Lauren Conaway

Yeah.

35:14.40

Helena Krusec

Sometimes 10 minutes that’s a long time. Usually, 5 minutes tops pitch if not led the pitch, and you have to be able to know your product inside and out flat and share that information when it comes to pitching quote-unquote the air force. Um, the way that we do that is really through that phase one site ritter.

35:15.42

Lauren Conaway

Right.

35:30.60

Lauren Conaway

Okay, please.

35:32.33

Helena Krusec

Right? The open topic is the easiest way to do that because, again, the open topic is designed for small businesses and industry to tell us what we don’t know, so we start with soliciting from Airmen and guardians that we work with, really a wish list which we call our focus areas.

35:39.25

Lauren Conaway

6 Yeah, so.

35:49.70

Lauren Conaway

Okay, so.

35:51.16

Helena Krusec

We created this massive list. That’s the shopping list of all of these things in areas where we know we need help, but we don’t necessarily know what it is that we need to buy. We offer that up to the industry and say okay, open the topic and show us your solutions. What should we be looking out for, and for what?

36:05.13

Lauren Conaway

So what would be can you give us like a couple of examples on your shopping list just a couple but.

36:11.14

Helena Krusec

Oh my gosh? Um, yeah, so yeah, folks, want to go look at it. I mean, it’s a really wide variety, right? So we are looking at things across the board from ah, so there are things like really traditional things that align well with the venture. Um, venture ecosystem, right? So there’s.

36:28.20

Lauren Conaway

Ah, yeah, sure.

36:30.82

Helena Krusec

Lots of SAS. There’s a lot and probably many. That’s stuff that’s very common, but then there’s also, you know, things that do qualify as dual-use but might have more of a defense lead. I’ve seen some really interesting solicitations from, for example, the nuclear warfare center.

36:40.85

Lauren Conaway

Shi.

36:49.16

Helena Krusec

Um, you know, thinking about different components of technologies that are going to help to make sure that our nuclear arsenal operates. Well, at all times. Um, really showing because it’s yeah, I know what you mean, I know what you mean, but it really shouldn’t because of this.

36:55.20

Lauren Conaway

See you singing those words to me, and it just sounds so scary. I’m like, oh okay, all right, continue.

37:07.42

Helena Krusec

This, to me, acknowledges that we are always working on improving, right? And to me, that’s something that makes me feel comforted. One thing I did want to put in here, though. One thing we did want to put in here that was a shout at and something just it’s a callback to something that you mentioned earlier is that um.

37:09.40

Lauren Conaway

Yes, oh absolutely, you know, making people feel safer is never a bad day. What’s up?

37:26.14

Helena Krusec

It’s not just when it comes to the things that the air force is buying. We’re not just looking to buy weapon systems and things that are machines affiliated with warfare. I’m doing a lot right now with the Air Force Surgeon General’s office, which is looking at medical technology and health stuff and thinking about it.

37:33.20

Lauren Conaway

Right.

37:44.50

Helena Krusec

Helping to keep people alive for humanitarian purposes. A ton of biotech. It’s really the range of possibilities of what the government or what people conceive that the government we would want to buy is much much broader than you would ever think it would be and um.

37:59.42

Lauren Conaway

Well yeah.

38:02.85

Helena Krusec

Yeah, it’s going to be really exciting to see what kind of new things get proposed in this next solicitation cycle because there’s always something new.

38:09.62

Lauren Conaway

Yeah, well, and I mean I find that fascinating like you even mentioned SAS, and you know software is a service like the military has procurement systems and the military has back-office staff and people you need to push paper to keep things moving forward and so like even there it’s like. The same kind of systems that you know the small business community and even you know the big corporate community could use or things that the military could definitely use, and I guess people don’t necessarily think about that all the time, or at least I don’t.

38:39.95

Helena Krusec

Yeah, and what I like to do, and that kind of ties it back to the beginning of my story, really is that the whole reason why I got into this is that there was a small community of people that recognized that in order for the government to do their jobs better. They had to start acting more agilely like startups.

38:55.87

Lauren Conaway

Right? Yeah, how do we institute deficiencies, and how do we make it possible for us to make better quicker decisions using data and using technology? I love that.

38:58.81

Helena Krusec

And that’s one of the reasons. Yes.

39:07.96

Helena Krusec

Yeah, it’s um, it’s a very cool space to be in, and I think it was a really easy transition for me to move into going out of the venture capital space and into this one because I’m still working with all kinds of new exciting technologies and.

39:21.20

Lauren Conaway

Oh, for sure.

39:24.34

Helena Krusec

Having the opportunity to work with incredibly passionate founders and making sure that I’m working towards a mission that feels good at the end of the day, right? Bringing solutions to the warfighter and helping to build technologies that actually.

39:31.64

Lauren Conaway

Yeah.

39:38.97

Helena Krusec

Meaning something for society is something that is incredibly compelling to me.

39:41.36

Lauren Conaway

Yeah, no, I love that I mean it. It really does truly sound like you have landed in the perfect spot. Do you love what you do? It sounds like you love what you do.

39:48.83

Helena Krusec

I do, and I’m so bad about um, you know, um, I’m really a nerd about this. I really do love this community. I’m very passionate about the mission. I’m always wanting to make sure that everything we’re doing has a so what you know and to me, there is no bigger. So what.

40:03.56

Lauren Conaway

Yes.

40:08.39

Helena Krusec

Then you know, contributing to the national defense and making sure that our warfighters are well equipped to do their jobs well but then also supporting the national economy like it matters everything revolves around that. So I feel very lucky to be doing something that I love.

40:17.53

Lauren Conaway

Yeah.

40:24.70

Lauren Conaway

Yeah.

40:26.48

Helena Krusec

I definitely don’t feel like I have to work a day in my life because I love what I’m doing, um, you know, even if I have to be the public Mouse Mouthpiece for ah, the engagements team because one secret that I love to tell people is that this is not natural right? Public speaking is a weird thing.

40:41.38

Lauren Conaway

Yeah.

40:43.19

Helena Krusec

Still find myself hearing my own voice and like cringing. But um, even that doesn’t stop me because I love my job at the end of the day. So yeah.

40:48.36

Lauren Conaway

That is awesome. Um, well, so speaking of things that you love, here goes. I’m going to ask you the human question here it comes, and I’m gonna you know what? I’m actually going to touch back on something that we have already kind of discussed, but I’m gonna ask you? What’s your favorite movie?

41:05.34

Helena Krusec

My favorite movie, oh my god, I think I have to go back to Independence Day. I think you got your original Independence Day. A lot of people say that they like Die Hard and watch it 50,000,000 times without getting some of it.

41:07.42

Lauren Conaway

You have one.

41:11.92

Lauren Conaway

I was kind of hoping that you would say that.

41:22.70

Lauren Conaway

Yeah, oh my gosh. I cry at Bill Pullman’s speech every damn time. 

41:25.28

Helena Krusec

I think Independence Day is mine. I know my age, but I mean, it’s a great movie. It is surprising.

41:41.30

Lauren Conaway

Frequent but on a regular basis. Like a couple of times a year, at least. It’s like one of my comfort movies because there are places where it’s so silly. And there are places where it feels so real like this could really happen. I just love it so much, but Bill Pullman’s speech.

41:44.50

Helena Krusec

Yes.

41:53.69

Helena Krusec

I know I’ll let the cooking flow soon here.

41:59.61

Lauren Conaway

When he’s talking about the fact that we will not, you’re quietly into that. Yeah, like he’s just so passionate, and I’m just like, yes. Every single time he does it. Every time.

42:01.53

Helena Krusec

Go quietly and the money.

42:09.42

Helena Krusec

Well, I will say, and you’ll find this funny. But I come out of the public policy space. All of my friends are nerds, right? So everyone has some piece of media where they have a favorite representation of the president or politics. A political office.

42:15.34

Lauren Conaway

Yeah.

42:21.39

Lauren Conaway

Sure.

42:26.99

Helena Krusec

My favorite representation of a president is him in that movie. He is my ideal president. Absolutely, president.

42:28.82

Lauren Conaway

Oh, hell, yeah. He’s amazing. And then, in the sequel, I feel so bad for him. Because he said, well, spoiler alert, sorry folks if you haven’t seen it. You know, the second one, he’s a little broken.

42:41.49

Helena Krusec

If they haven’t seen it by now, I mean, it’s a little late. That’s like having you control it.

42:46.24

Lauren Conaway

Yeah, you know, I don’t feel like we’re giving away any late like we’re not giving away the farm here. If you haven’t seen it, definitely watch it. Give it a try. But you have had ample opportunity until now. Yeah, for sure, I feel very inspired.

42:55.69

Helena Krusec

Exactly. Go watch Bill Pullman. Feel better about your life [and] everything. Yes.

43:05.50

Lauren Conaway

I always leave it feeling very inspired. And I definitely left this conversation feeling inspired. So I have to thank you, Helena! Thank you so much for taking the time to sit down and chat with us.

43:06.73

Helena Krusec

Yeah.

43:14.67

Helena Krusec

Well, good. No, thank you so much for having me. It’s always nice to just come chat and do real people stuff, especially in this weird time of COVID.

43:23.61

Lauren Conaway

I am so glad that we had the opportunity to chat with you. And I am so glad that we have folks like Universal Registered Agents out there once again. We want to give a big thank you to today’s episode sponsor, Universal Registered Agents. Set up your new business and maintain all aspects of your business compliance. One of those hard things to do as an entrepreneur. Their goal is to make your job easier, so you can focus on what you do best—running your business. Connect with them by visiting the link in our show notes. All set, I would like to point you to; I don’t know if you don’t fully understand NFTs. We have an education for you. I want to point you to the NFT series that Matt DeCoursey has put together to explain this interesting new concept. And it is put together in several parts. I can’t remember how many parts, but a several-part series explaining how to use them and what they are; all of that fun stuff. So definitely keep an eye out. For those on the Startup Hustle channels, we are very grateful for you. Thank you for taking the time to listen to us week after week. We love sharing stories of founders with you, and we love the fact that you enjoy them. I hope you keep doing it and keep coming back. We will see you next week, and we will catch you on the flip side.

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