Companies could profit by adopting military technology for civilian market
MAITLAND, Fla., 10 Jan. 2006. Milcom Technologies CEO Jason Rottenberg said no matter what happens to the Pentagon's budget in the next several years, companies developing civilian applications for military technology will likely benefit.
That would be good for Maitland-based Milcom, which creates and nourishes businesses built on technology originally used in weaponry.
"I think the government's investment in defense contractors will be good for us going forward," Rottenberg said. "The Defense Department's investment in technology paid off in Iraq. I don't think you will see less spending from that perspective."
Many of the technological advances -- from communications systems to high-tech training equipment -- have been the genesis for businesses in the private sector.
One Milcom creation, MeshNetworks of Maitland, turned a wireless broadband system into a civilian communications product that has been snapped up by communities around the country. Last year, Motorola bought the company, yielding a big return for Milcom.
Rottenberg, 35, became Milcom's chief executive last fall. He joined the firm in 2000 and in 2003 took charge of OnPoint Technologies, a nonprofit venture with the U.S. Army that invests in small businesses developing technology that could benefit the military.
Milcom and OnPointmake Rottenberg a gatekeeper. As Milcom searches defense contractors for ideas with civilian potential, OnPoint encourages technology companies to develop products with military applications.
"Our specialty is investing in companies at the intersection of the commercial world and the defense department," Rottenberg said.
He sees potential in both areas. OnPoint has 10 companies in its stable, which it helps through a $50 million federal fund. And Milcom nourishes six other businesses.
Rottenberg, who succeeded retiring CEO Mike Buffa, said changing tactics in the Iraq war have created a steady demand for new military technology. That, in turn, has kept defense contractors busy.
"These are great times for defense contractors," Rottenberg said. "Their share prices are doing well, and they are growing their top lines with the new opportunities coming to them."
The only downside, from Milcom's perspective, is that the large contractors are so busy with Pentagon work that they have little incentive to explore civilian applications for their technology.
Rottenberg said that when Pentagon funding eventually becomes leaner, the contractors will probably have more interest partnering with Milcom affiliates.
"It's a cyclical business," he said. "If things slow down, there will be more time for companies to look for opportunities and they will be looking for other sources of revenue. So a slowing of the defense sector wouldn't necessarily have a downside for us."
Rottenberg said that finding venture capital for products spun out from defense contractors remains Milcom's biggest challenge.
"We remain affected by the ups and downs of the venture-capital community," Rottenberg said. "It's looks like the venture-capital market is starting to get hot again, which is encouraging."
Source: The Orlando Sentinel, Fla.
