Tapping Into the World’s Largest Tech Buyer: The U.S. Government
Investing in dual-use technology with Christine Keung - J2 Ventures
Many people don’t realize that the U.S. government is the world’s largest buyer of technology. With the Department of Defense (DoD) operating on an annual budget of $800 billion, $70 billion is specifically allocated to research and development (R&D) as non-dilutive capital. These funds—often distributed as grants or contracts—allow startups to secure significant financial support without giving up equity.
Governments share many business needs with the private sector—such as training, recruiting, and accounting—their requirements might not be as specialized as you think.
In a recent talk, Christine Keung, General Partner at J2 Ventures, shared her insights on how her firm bridges the gap between commercial and government markets as a venture capital investor. J2 Ventures focuses on dual-use technologies—solutions that address challenges in both commercial and government sectors—unlocking significant potential for startups. Below are the key takeaways from her discussion:
Dual-Use Technology: A Catalyst for Startup Growth
J2 Ventures invests in early-stage companies across industries such as telecom, healthcare, cybersecurity, and software. Their approach emphasizes identifying startups with proven commercial traction and helping them expand into government markets.
What sets J2 Ventures apart is their team's deep expertise across defense innovation, academia, and commercial sectors. This unique blend enables them to identify opportunities that others might overlook. Their portfolio reflects this diversity, ranging from advanced manufacturing and quantum technology to unexpected verticals like gaming companies in the Roblox ecosystem.
Oura Ring: An Unlikely Gov-Tech Success Story
One of J2 Ventures' most compelling success stories is their investment in Oura Ring. Initially designed as a consumer health wearable, the ring found an unexpected but critical application in military settings.
The ring’s precise breathing measurements were instrumental in preventing the spread of COVID-19 on military bases. Additionally, it enhanced pilot safety by monitoring dizziness and oxygen levels at high altitudes. This dual-use innovation led to a $96 million government contract and contributed to Oura Ring achieving a $5 billion valuation.
Why Founders Shouldn’t Overlook the Government Market
For founders building deep-tech companies, the message is clear: don’t underestimate the government as a customer. It’s not just about securing contracts—it’s about unlocking new paths to scale, differentiating your business, and building defensible market positions.
In today’s competitive global landscape, dual-use strategies can offer startups a critical edge. By tapping into government markets, founders can drive both commercial success and national competitiveness, leveraging opportunities that extend far beyond traditional private-sector channels.