In the past few years more than 80 innovative startup companies as of April 2015 have been valued at more than $1 billion. With the most innovative and those with the most potential reaching well beyond this mark. This has led to new terms being coined to describe these companies, with Unicorns, to define companies that have soared to a $1 billion valuation or higher, and more recently deca-Unicorns, defining those companies with more than $10 billion valuations. Recently, however a different and more important type of value is being placed on these entrepreneurs. Governments are increasingly turning to these innovators to help solve the most pressing security issues facing the world.
Two recent examples highlight the increased value the government puts on innovation and entrepreneurs. At the April 2015 RSA conference in San Francisco, Secretary of Homeland Security Jeh Johnson admitted that the government does not have the answers for combating cyber security issues. He called on the innovators in the crowd to help create more secure networks. They are looking for the help of the tech. world to create a type of network that cannot be hacked. At the same time, Defense Secretary Ash Carter recently announced the new "Defense Innovation Unit X", a platform for partnerships between the government and innovative companies like those in Silicon Valley. For this unit, the Pentagon is setting up an office in Silicon Valley, with the goal to identify game-changing technology. In effect, we are now crowd-sourcing solutions to key national security issues.
It has long been the case that entrepreneurs working together with the government represent the best avenue to discovering innovative solutions to key issues facing the nation. From inventions such as the stealth bomber in the 80s, to today's innovations being sought from the tech world, the government has turned to the bright minds at innovative companies to aid in solving pressing matters. To cite a recent example, earlier this year Google announced the Google Government Innovation Lab. In this lab, teams are focused on finding innovative solutions to specific local and state government challenges.
Requests from Ash Carter and Jeh Johnson show that the innovative spirit and brainpower of Google and others are needed beyond the local and state level. Innovation and the public-private partnerships being struck demonstrate the "value" being placed on these companies cannot be measured singularly in dollars. While high valuations and stock IPOs can be a key motivator driving innovation, often the real long term value of innovation is in the ability to help on matters of national security. While cyber security and defense are natural segments to highlight the value of innovators to their host governments, many other aspects of our readiness on energy, climate change, risk financing and healthcare, among other areas, are increasingly depending on entrepreneurs for viable solutions.
In the capital markets for instance, entrepreneurs at SoFi and other crowd-funding vehicles are paving the way to an economy with greater access to capital. Critically, these firms are also helping to drive down the often extortionate interest rates and conditions imposed on early stage firms and small to mid-sized enterprises; many of which, have set their sights on solving intractable social and security issues. In the energy space, the shale gas bonanza in the U.S. may only temporarily eclipse the standards war that is being waged in renewables, energy storage and efficiency, where entrepreneurs and innovative established firms are leading the fight against climate change. The laggard global response against the West African Ebola outbreak, was in no small measured led by entrepreneurial organizations like Medecins San Frontiers (MSF), who had a veritable first mover advantage while world powers gathered courage. Since, players of all sizes in the pharmaceutical and biotech industries have invested hundreds of millions of dollars in innovative Ebola treatment and containment measures.
Perhaps the most important correlation between entrepreneurs and national security, is the creation of jobs and accessible economic progress. This much is acknowledged in the SPARK Global Entrepreneurship initiative led by the Obama Administration to foster the preconditions for entrepreneurialism around the world. In short a world that trades together, stays together. There's reason for hope that many of our most pressing challenges in cyber risk, the environment, healthcare and development will be addressed by bright minds who see opportunities beyond their resources.
Dante Disparte is Founder and CEO of Risk Cooperative and chair of the Business Council for American Security. Noah Skillin is a Founding Member and Managing Partner of Risk Cooperative.
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