How startups can get a foot in the door of government contracts, according to Dcode Capital

Today on Equity, we’re taking you backstage at TechCrunch Disrupt. Rebecca Bellan caught up with Rebecca Gevalt, Managing Partner at Dcode Capital following their onstage discussion about the boom in national interest startups. Also on the panel was Topher Haddad, CEO of satellite imagery startup Albedo, and Kai Klepfer, CEO of biometric gun startup Biofire. Tune in to hear Bellan and Gevalt dive deeper into how startups can get a foot in the door of government contracts. Check out the full onstage conversation here, and Equity will be back on Friday! Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:11Rebecca Bellan?

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. I'm Rebecca Ballon and this is our Wednesday episode where we home in on a trend in the tech world and dive deep. As most of our listeners know, the Equity crew was in San Francisco for TechCrunch Disrupt last week, and what a week it was. Now, you're about to hear a conversation I had at Disrupt with Rebecca Givault. She's a managing partner at Decode Capital, and she was one of the panelists in an onstage discussion that I led about the boom in national interest startups. So think anything from climate resilience tech to satellites and also on the panel was Topher Hadad, CEO of satellite imagery startup Albedo, and Kai Klepper, CEO of biometric gun startup BioFire. Now, you can watch that whole recorded conversation on techcrunch.com and

• 0:54Rebecca Bellan?

  we'll also link to it in the show notes. But I wanted to get some more specific insights out of Rebecca regarding how startups can get a foot in the door of government contracts and secure some of that repeatable revenue. So without further ado, let's listen to my chat with Rebecca Givault.

• 1:11Rebecca Bellan?

  I'm joined today by Rebecca Givault, managing partner at Decode Capital. And Rebecca joined me onstage at TechCrunch Disrupt to talk about the boom in national interest startups. And actually, at the end of the panel, when I asked the audience for questions, there was a massive line and everyone wanted to ask Rebecca questions. So I thought, you know what, I'm gonna write down these people's questions and we're gonna address it all on the podcast and more. So thank you Rebecca for joining us. Can you tell us a little bit about, well, first of all, how's it been in San Francisco? I hear you took a Waymo for the first time.

• 1:42Speaker 01

  Yeah, I was actually, I was out with friends of mine who I used to work with. And we were talking about Waymo and she's like, well, the walk back to my house is really short, but let's do it anyway. So you can experience it. So did the Waymo from the backseat, which is actually a recurring nightmare of mine, that I'm in a car in the backseat and can't reach the front and it's out of control. So obviously, control issues there. And then to get here today, I thought, time to get over my fear and I got a Waymo all by my lonesome.

• 2:10Rebecca Bellan?

  Wow. So you must have, I think you've gotten past that nightmare now. You probably never have it again.

• 2:14Speaker 01

  Well, that was the intention of trying to do this. I sat in the front seat this time.

• 2:17Rebecca Bellan?

  Good. Yes. You really get to see the phantom steering wheel situation.

• 2:21Speaker 01

  Which is interesting. And then you also realize that if anyone jumps out in front of the car, they can essentially trap you.

• 2:28Rebecca Bellan?

  Yes, stop the car. Yeah. You see that? There was a video about this recently and then everyone, this woman was stuck in the car because someone was just like kind of harassing her from the outside. But for those, if that happens to you, you can apparently call for customer support to help. And they'll do that. I also have taken my first Waymos. I know I'm like a reporter who covers Waymo, but this is my first time in taking one in San Francisco. I wasn't weirded out. Some of my colleagues were in the car. They're like, oh, my God, I'm scared. What? This is so weird. I'm like, I feel like I'm on a ride at Disney World. We're going 15 miles an hour. It's fine. But anyway, we're here to talk about national interest, startups, working with government. So tell me a little bit about Decode Capital because it's not only a VC, right?

• 3:03Speaker 01

  Correct. Yeah. Decode Capital is a venture capital firm, but we are affiliated with an advisory firm called Decode. So two separate entities, starting with Decode first. So it's an advisory firm based in downtown Washington, DC. It's about 30 people. And what we do is we try to get better tech into the federal government. That's the core mission. There's two ways that the advisory firm does that. The majority of our work is primarily with the Department of Defense, and we teach the Department of Defense how to go out and find the right, what they call non-traditionals, but what you and I would call startups, tech companies to actually meet the mission. So functionally, let's say there's an agency

• 3:43Speaker 01

  inside the DOD who wants to modernize some system. We go in and work with them and help them to understand the full chain of things that have to happen to find the right technology, from gathering the right requirements, the end users are on board, the budget owners, the contracts officers, the compliance officers, all the things that the government has to do so that when they go out and buy a technology, they can actually get it into the hands of the mission end users. So that's the federal government side of our business. But probably of more interest to listeners is what we do for technology companies. So we run a federal accelerator for companies to teach them everything they need to know about the federal market. So the idea here is it's a very low cost and lightweight program. It's virtual, one to two hours per week, eight weeks.

• 4:28Speaker 01

  We run it quarterly and we cover key tenants of the federal market. So, marketing, pricing, mapping your use case, working with resellers, distributors, partners, all those things that you have to know to not get sideways in a very difficult and opaque market. So, the idea is democratizing access to this knowledge for as many tech companies as we can. We've worked with about 260 so far. And so then, yeah, the idea is more companies know how the federal market works, they won't make the expensive mistakes. So, they'll get in it, they'll stay in it, they'll make their technologies available to the federal government. And then, on the other side, the federal government now knows how to work with these tech companies.

• 5:06Rebecca Bellan?

  What stage of startups are we talking here? Like, this is an early stage, I assume?

• 5:10Speaker 01

  Well, it's a great question. So, we have struggled quite a bit, to be honest, about calling it an accelerator because that's what people immediately go to, right? It's early stage and you're taking equity and we don't do either of those things. So, no equity, it's a fee-based program and it's stage-agnostic for companies. So, when we get earlier-stage companies coming through the program, it's typically founders trying to figure out, do I want to go in the market? And if so, when and how do I do it in a smart way? If it's a growth-stage company, of which we've had dozens of, you know, C and D, I would say, companies, it tends to be people who are managing a federal vertical in the leadership team and have never actually sold federal before. So, they're trying to figure out, why is my team telling me that I always have to sell through a partner?

• 5:54Speaker 01

  Why do I have to price my product with, you know, sell-through issues? Why is everything taking a year and a half to close? All those sorts of things. So, the program is designed for very busy people. Fed sales is not their number-one priority, but the goal here is get people the knowledge they need to manage the team or to make the right decision to get in the market.

• 6:14Rebecca Bellan?

  You mentioned a lot of the federal dollars and a lot of the work you do is with the DOD. There's certainly been, I feel like in the tech world lately, this sentiment shift, right? Like a few years ago, you know, I think actually Google employees are still protesting this today, but they're taking it a little less seriously. But a few years ago, you know, tech workers were protesting, they're walking out because they're seeing that their technology is being given to Department of Defense or what have you. There's a shift lately and can you tell me why that is? Is it just because of the geopolitical issues that are going on today? Is it just because maybe the VC market's a little drier and people are like, well, I need to get money somewhere?

• 6:45Speaker 01

  You know, I think it's a great question and in my opinion, it's based on a variety of things. So I was in the government during a lot of that ideological resistance to working with the government and tech companies, you know, if they got investment from Incutel, let's say, which for lack of a better description is the venture capital arm of the intelligence community. Technically, they're a nonprofit. They get federal dollars to invest in about 50 tech companies per year. And in order to make an investment, one of the intelligence community agencies essentially has to raise their hand and say, I have end users that can use that technology. So Incutel will invest in the company. The company will then modify their technology in some way so that the intelligence community can use it.

• 7:27Speaker 01

  And then the ideal scenario is at the end of what they call a work program, which is usually one to two years for that company to modify their technology. There's a product that the government can then just go out and buy directly. That's generally the idea.

• 7:39Rebecca Bellan?

  Okay, so you were working with Incutel around this time?

• 7:42Speaker 01

  Correct, yes. So when you're talking to tech companies, one of their first questions when you're coming, I was at the CIA and when you're talking to them and you're openly from the CIA, founders will say, I don't know if I want to be associated with that publicly. You know, a lot of times you'd have founders who were patriotic and wanted to help out the intelligence community, but also had to be cognizant of if this comes out, what does that do to my business? I think that sentiment has shifted in the last five years. I think that the two reasons that I would attribute that is there is benefit to the United States military and the broader DOD and even the government. I think COVID taught us this too, that we need to be able to have systems that have data where we can actually derive insights from them, make good decisions, things like that.

• 8:27Rebecca Bellan?

  You said a lot of the stuff that the government's working with today is really old as well, right?

• 8:30Speaker 01

  Correct, correct. And so there's a lot of room for improvement there. So I think that that has shifted. And then the other thing that I think that shifted is the venture capital community. VCs tend to function a little bit on FOMO and there definitely tends to be bubbles that come and then go. And I think that now defense tech is an interesting thing for people to get into. A lot of times VCs won't know a whole lot about how the federal contracting process works, how to value those dollars, but they do know that the federal government is buying. So in an economic environment where it's harder, particularly for SaaS companies, to sell in the private sector, the government looks more and more attractive. And that gets to where our venture fund is. We invest in companies that have a dual use focus.

• 9:12Speaker 01

  And what we're able to do is take a look at a company's valuation, their revenue, their balance sheet, the contracts that they have, and in the federal space, assign a value to them because we understand, is that contract really going to reoccur next year? What does their future look like in the government based on our knowledge that we get from the advisory firm?

• 9:30Rebecca Bellan?

  Well, there's been a lot of shifting sentiment and there probably will be more shifts happening. I mean, we talked about this a little bit on stage, but how are you advising startups to think about planning ahead for different administrations? Or is that even a concern?

• 9:44Speaker 01

  What we typically talk to tech companies about is that if you have a technology that improves the way the government functions, and I'm talking about the core use cases inside the government around data, cybersecurity, AI, things like that. Generally, it's a bipartisan issue, right? No new administration comes in and says, everything's working swimmingly. Let's keep our systems the way that they are. So if you have a technology that's out there that can improve the way the government is conducting its everyday business, it doesn't really matter what administration is in power. You will see some shifts with money based on priorities and you will see a shift in, you know, there's politicals inside the government and then there's careerists. And generally, we tell companies, work with the careerists. Those are the people who are day in, day out, working inside the government.

• 10:30Speaker 01

  They're making the contracting and budgeting decisions. And those are the end users you really need to meet and introduce your technologies to.

• 10:35Rebecca Bellan?

  Another thing that we discussed on stage that I thought was interesting was talking about security clearance, right? So, you know, onstage we had Albedo, which is a satellite company. They do super-low orbit, super-high-res satellite imagery, both for government and for private companies. But when you're working with government, trying to sell to government, especially like certain agencies, without a security clearance, might be tough. How do you advise startups in that space?

• 10:59Speaker 01

  So if you're new to the federal government space, we would generally advise not to go after the intelligence community agencies because of those issues. Those are really tough to get around. If you don't have a clearance, it's often even hard to see what it is they want to buy because a lot of the requirements that they put out are within classified systems. So if you are trying to test out the market, see if you really have product-market fit in the federal government, don't go for the absolute hardest thing. Go to the places where you can see, and there's different ways that we teach companies how to do this, but you can see that they're spending dollars in the tech area that is relevant to what you're trying to sell, and you can actually see where those dollars are going, who they're going to. Are they your competitor? Are they related? Things like that.

• 11:42Speaker 01

  If you do get interest from intelligence community agencies and you do need people with clearances, you know, one of the things, I think we talked about it onstage yesterday, was hiring people who are coming out of the intelligence community who have the clearances already. They have basically a grace period where they have their clearance before it has to get held, and by "held" that means they have to be associated with a contract that requires cleared work. So there's a lot of ins and outs that younger companies or smaller companies, or even larger companies, need to know on how those clearances work.

• 12:11Rebecca Bellan?

  Where do you find these people? Like, is there a specific recruitment agency that's funneling them? It's like, "Oh, you've got clearance. All right, here's some people who need you."

• 12:18Speaker 01

  You know, everything is networking. There's a lot of people who are coming out of the intelligence agencies who then go and work for startup companies or start their own startup companies. NSA in particular has a really robust entrepreneurship Kind of program where people can develop tools at NSA, roll out and then sell them commercially. So there are a lot of people with clearances around that have been in those agencies and have a lot of experience.

• 12:40Rebecca Bellan?

  You know, we talk about networking. One of the people who was waiting online to ask questions yesterday, she said that, you know, she's working in the circular economy space, waste management. And she just doesn't know how to access, like, how to even get in the door to learn more about different government pain points as she tries to form, you know, her business and then create a product. How do you, how do you get in those doors?

• 13:02Speaker 01

  Well, I guess the first question you'd have to ask yourself is, what is your end goal to get in those doors, right? So in her case, because we did have a brief conversation about this after, it seems like where she would need to sell her product is at the state and local level. But there are grants and other things coming out of the EPA and other agencies. So, you know, there is a value to your time, particularly as an entrepreneur and where you spend it. So you want to be as efficient as possible. I think that there's definitely some benefit at the earlier stages to be networking inside the agencies that you ultimately think will have some sort of regulatory or decision-making play over where you want to sell. But, and in her case, the government wasn't the end buyer. So go to the end buyer.

• 13:46Speaker 01

  That's where you need to be selling your product. Understand from them, who do you work with the most in the EPA or whatever agency? What office in there do you have to work with the most? And then, you know, you use LinkedIn, there's org charts of who sits where inside the agencies. And then it's just the regular networking game. But I don't know if that's the best use of an entrepreneur's time. I think the best use for your time is where do you have product market fit? Where can you get your products sold right now? Build a reputation and a name for yourself and then work your way up into the government agency if they really don't have any buying authority over what you're doing.

• 14:19Rebecca Bellan?

  Do you think that, like, working with specific VCs could help in that regard? I mean, like, for example, Topher Haddad at Albedo yesterday mentioned that one of his VCs that he's working with has kind of defense connections. And that's, that was really helpful. And that kind of led him towards maybe more of a defense targeted product market fit versus if he, you know, chose a VC with like. Connections with insurance age. I don't know.

• 14:42Speaker 01

  Yeah, absolutely. And we run into entrepreneurs like that rather frequently who come to us and say, "We would really love somebody on our cap table who understands the federal space." And so, yes, I would say that is, that is one way to do it. We actually have one of our portfolio companies, it's a really cool company called OneNav, and they were focused on the commercial market but thought that they're, they basically have designed the latest GNSS chip that can connect to the newest signal coming off the satellites for geolocation. And there's huge DoD applications to what they're doing, and they didn't have a lot of great ins to the DoD. And so, we came on board with them and fully focused on, "Here are all the introductions that we can possibly make for you inside the DoD to get your technology in front of the right people."

• 15:24Speaker 01

  And so, that was why they wanted us on the cap table. That is why we joined. We've been hugely happy with them. And so, yes, absolutely. When you're looking at, at investors and who you want on your board or on your team, you definitely should take a look at that and be realistic.

• 15:38Rebecca Bellan?

  And then, you know, people who are trying to kind of go it alone, and, and maybe their customer is local government, but they're, they're trying to get those federal grants or state grants. Someone that spoke to me said that they were using Upwork for grant writers and it just wasn't cutting the mustard. Do you have any proposal writer companies or anything in DC that you trust? Is, was the question that they asked me.

• 15:56Speaker 01

  Yeah, absolutely. So, I want to preface that with, that we don't do a ton with grants, per se. It's, so a lot of where we focus and where our companies focus is dollars from the Department of Defense. And so, one of the main ways that companies are getting into the front door right now are SBIR. I guess you could technically call those grants. And so, we work a lot-

• 16:16Rebecca Bellan?

  Is it non-dilutive?

• 16:17Speaker 01

  It is non-dilutive. And what it, it's actually a really interesting program. It's been around for a very, very long time, run by the SBA. The Air Force was the first one to basically take a look at that program and leverage it to widen the door for startups to get in the door in the DoD. And so, what they've done is they have adjusted the program so that they have a, an open topic is basically what they call it. So, typically, when you have an SBIR opportunity, it's designed around a particular technology area the government is looking for. What the Air Force and now others do is they had an open topic. So, all you had to show is that somebody in the Air Force- Could use your technology and then they could grant you a phase one. And so then a lot of companies started looking for proposal writers for exactly that kind of thing.

• 16:58Speaker 01

  Because once you get your first SBIR, the government can then sole source to you in later contracts, which is a big deal for companies. We work with a company called Ciber Advisors. They've been wonderful to work with and they do more than just CIBRs. They help companies with an overall strategy going into the DOD and with opportunities. So after you get your phase one Ciber, they also work with companies on proposal writing for opportunities further on down the road past that Ciber. That's sort of like your first kick in the door and then you find the right customer and then, you know, get away to contract with them.

• 17:30Rebecca Bellan?

  Someone also came up to me and said, Rebecca mentioned a lot of websites and agencies onstage. What were those websites?

• 17:37Speaker 01

  Yeah. So one of the things that we talked about onstage was as a company, how can you figure out if the biggest thing is figuring out is there product market fit for me in federal government? And that is the most important question that you should ask yourself before you try to go into the market. What you need to be doing is some research to figure that out. So there's a couple of tools out there that basically get all the publicly available data on what the government is buying, who they're buying it from and through what vehicles they're buying it. Those tools are Gov Tribe is one, GovWin is another, BGov as well. And what those tools allow you to do is say, you think you want to get into the federal space, you know who your competitors are, you can actually go in, search for your competitors,

• 18:20Speaker 01

  see who's buying their product, how they're buying it, how, you know, all that kind of stuff, which then allows you to start targeting where in the federal space you want to go. Because you really do, you can't boil the ocean in Fed. You have to pick where the use cases most align with your technology and then develop a strategy to go after those smaller opportunities.

• 18:39Rebecca Bellan?

  Wow, smart. Lots of defense tech, you know, they require US citizens. How important is that? And then also, if you're a foreign entrepreneur trying to work with the government, what options do you have?

• 18:50Speaker 01

  Yeah, so that that happens quite a bit. It depends what kind of contracts you're going after. So the ones that we just talked about, the SBIR program and that open topic in the US military, that is geared for American companies. And so that basically what the government does is they look at ownership. So 51% of the company has to be owned by a US citizen or legal permanent resident. So if you do have a company and you're dual citizens, that's totally fine for those types of opportunities. And then in terms of how, you know, there are a number of foreign companies that want to work with the government. It typically involves setting up a US subsidiary so that it's domiciled in the US. And there's a whole host of other kind of rules that companies have to and hoops that companies have to jump through in order to do it.

• 19:32Speaker 01

  And then you also have, I think we also talked briefly about software development and making sure that if you're selling to the DOD, you can't have software developers working on your core products that are from, I think there's four restricted countries these days. So that does make things trickier. You do want to have a US subsidiary. The owners, the ownership of the company needs to be 51% US citizen owned. And then otherwise, there are other ways to do it. You can also sell through a partner. There's other strategies and that again gets to, you need to have a partner when you're trying to figure out this market. And that's why we offer that accelerator program. So more companies can understand how it works.

• 20:05Rebecca Bellan?

  Amazing. Thank you so much for joining us. Where can our listeners find you online or if they want to learn more about the accelerator program?

• 20:11Speaker 01

  Yeah, so the accelerator program is at decode.co. So D C O D E dot co. And then you can find me on LinkedIn. I'm out there and happy to talk to anybody about it. The more companies that we can get through that accelerator program, the better off we think the federal government will be because you've got more people on both sides of the market that know how to work together.

• 20:29Rebecca Bellan?

  Amazing. Well, that's time for us. And listeners, you can find me on X at Rebecca Bellan and threads at Rebecca Bellan underscore writes. You can always find Equity Pod at Equity Pod on X and threads. And thank you for joining us. We'll talk to you Friday.

• 20:45Speaker 02

  Equity is produced by Teresa Loconsolo with editing by Kel. Bryce Durbin is our illustrator and we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.