British technology merchant bank Restoration Partners created a new company — the VTC Group — that helps tech startups and small businesses bid for jobs with big corporates, after the project it launched with defence giant Lockheed last year was so successful.
The rapid pace of developing technology is leading to greater threats to the financial system and various industries. Almost all companies are vulnerable to cyber attacks these days as so much business is done online. No less of a threat is a company’s technology being eclipsed by a nimble startup.
Increasingly big companies are struggling to keep pace with technological change — they just move too slowly.
That’s why the VTC Group and Lockheed Martin, one of the world’s largest aerospace, defence, security and advanced technologies companies, have decided to form another Virtual Technology Cluster (VTC) — a cross between a startup incubator and a contract bidding platform.
The first VTC, set up in March last year with the help of technology merchant bank Restoration Partners, allows small-businesses and startups to bid for technology-focused contracts from Lockheed. Lockheed will also pick the brains of this network of contacts on various technology issues and give feedback to businesses on the bidding process to help them improve.
And Lockheed also offers funding to small business, startups, and universities to encourage them to develop projects useful to the company.
The idea is to bring the gap between nimble startups and the £65.7 billion Goliath that is Lockheed Martin by creating a hub for them all to interact with.
Back in March, Britain’s Prime Minister David Cameron said: “This partnership between Lockheed Martin and the Restoration Partners will offer cyber entrepreneurs an incredible opportunity to engage with investors, academics and those already established in the industry.”
One year later and the Restoration Partners has today formed the VTC Group because the initial network was so successful. Lockheed Martin is the main backer of the company but other, as yet unnamed, partners are being brought on too.
VTC Group says it will help attract “significant funding from a number of high profile investors” for members of the hub.
The company told Business Insider exclusively that the original network had so much success, the group has helped now helped Lockheed Martin set up another VTC to cover professional services — such as in accounting, legal, technical services and communications.
Auriol Stevens, CEO of the VTC Group told Business Insider: “We now have in excess of 70 technology companies in the VTC and with the success of some company contract wins, we decided to open another cluster for industry experts that can help on more professional services issues, such as lawyers, accountants and lenders, such as Natwest and smaller boutique firms. It’s a new category of support.
“With the growth and focus in smart cities, we can see how a VTC can help benefit other sectors such as healthcare, work, and transportation. Also in Fintech, some companies may be rapidly expanding but are looking for compliance type software.”
Why VTCs are becoming popular
Basically, the VTC connects dozens of businesses directly with some of the world’s biggest companies led by Lockheed Martin. Once they are in that VTC, big firms will say that they are looking for a certain product to be developed in a certain field. The smaller companies then pitch their product or service to the big company to get a contract.
It allows small businesses to discover what gaps need to be filled within some of the world’s biggest companies. It also gives them a direct route into bidding for that contract.
What’s even better is that you know that the contract is most likely to be relevant to your services.
Three VTC member companies have already providing support to Lockheed Martin’s research and development activities, while three other separate member companies also helped Lockheed Martin win a huge external bid themselves.
“For the businesses investing in these companies too, it’s completely different from funding a project that has not proven sustainability or a working product. It’s not a bet. The companies in the cluster already have customers and proof of innovation — a VTC allows backers to form alliances or hire them for contracts based on this proof,” said Stevens.
Crucially, if member companies don’t win contracts, they still have revenue coming in — the VTC is just an extra boost for innovation and products or services offered. It lets emerging innovators get a foot on the ladder.
“Amazingly, only 2 companies left the VTC over the entire year. But we are constantly growing. If you don’t win a bid, it doesn’t stop the opportunity for the company to work on other things. Also being part of the VTC means that you get to be part of many events, get continual feedback on pitches and therefore know what you need to focus on on getting those bids based on the feedback,” said Stevens.