Understanding the DOD DIU, OSC, Other Initiatives

Bringing Private Capital and Startups into National Security

David Rader, Director of the DoD’s Office of Strategic Capital, and Brian Wilson, Commercial Executive at the Defense Innovation Unit (DIU), joined us for an off-the-record discussion on how the U.S. is evolving its approach to working with emerging technology partners. Their insights offer a practical look at how startups and investors can navigate, and even shape, the defense innovation landscape.

The U.S. government is investing heavily in a set of technologies designated as “critical and emerging” (CETs)—a list that includes fields such as AI, autonomy, quantum sensing, and advanced materials. These technologies are central to defense strategy, trade policy, and innovation priorities.

What’s shifting now is how the government collaborates with non-traditional players. Offices like Strategic Capital and the DIU are building mechanisms to bring in venture-backed startups and private capital, helping ensure the U.S. maintains a resilient and diversified tech base.

At the same time, there’s growing interest in leveraging partnerships with allies like Israel, whose ecosystem is particularly strong in dual-use innovation.

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Q & A

What is the role of the Office of Strategic Capital (OSC)?
OSC was created to mobilize private capital around technologies essential to U.S. national security. It identifies gaps where market forces aren’t aligned with long-term resilience—areas where investing today may not yield a commercial return in 3–5 years but are critical to defense readiness. The office isn’t just another funding source; it’s a signal to the market that these sectors matter.

How does the Defense Innovation Unit (DIU) work with startups?
DIU provides a direct pathway for commercially focused startups to engage with the DoD. Instead of long procurement timelines, DIU uses faster contracting models that allow companies to get their tech in front of end users quickly. The emphasis is on dual-use solutions—products with both civilian and military applications.

Why is the U.S. defense ecosystem prioritizing CETs now?
CETs are increasingly viewed not just as competitive advantages, but as national security imperatives. These technologies influence everything from military readiness to economic resilience. That’s why CETs are now tied to export controls, foreign investment review, and new R&D funding programs across the government.

What makes Israeli startups uniquely positioned in this space?
Israel has a culture of mission-driven innovation and a concentration of startups that naturally build for both commercial and defense markets. This makes them ideal partners for U.S. programs seeking agile, scalable, and secure technologies. The main barrier is often structural—navigating U.S. contracting rules, compliance standards, and long-term funding requirements.

Key Takeaways

• Defense is now a market—not just a mission. Government players are creating incentives and pathways for startups to treat defense as a viable customer segment, not a distraction.

• CETs are a strategic priority. These technologies shape policy at the highest levels—impacting trade, investment, and military readiness.

• Dual-use is the sweet spot. Startups that serve both defense and commercial markets are more attractive, scalable, and fundable.

• Capital matters. Private investment is a necessary part of the defense tech equation, especially in areas like semiconductors, battery supply chains, and AI.

• Access is improving—but it’s still complex. Offices like OSC and DIU are lowering the barrier to entry, but startups need guidance to navigate the process effectively.

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Conclusion

As the line between commercial innovation and national security continues to blur, the role of agile startups and mission-aligned investors becomes more critical. Offices like Strategic Capital and DIU are helping to modernize how the U.S. engages with its innovation base—but understanding the landscape is still half the battle. For those building in the CET space, the opportunities are growing—and so is the need for clarity, speed, and strategic alignment.