Written By Jason Leo Carvalho

Section 8: Commercialization After Government Work

Overview

Government contracts and grants are a powerful launchpad—but long-term success depends on building sustainable commercial revenue. This section helps spacetech founders transition from defense-funded R&D to scalable commercial applications, without losing momentum or violating compliance.

Part 1: From Dual-Use to Multi-Market

Purpose: Identify adjacent commercial markets that can benefit from your government-funded technology. By expanding your reach into commercial markets, you can drive additional revenue and establish new growth opportunities while leveraging the value and capabilities developed through government funding.

Exercise: Dual-Use Application Map

  • Original Use Case: __________________

  • Adjacent Markets: __________________

  • Commercial Buyer Personas: __________

  • Unique Advantage (vs. incumbents): ____

Tool: Dual-Use Market Expansion Canvas

Goal: This canvas will help you systematically explore how your dual-use technology can be applied in adjacent commercial markets. By mapping out key pain points, identifying your unique advantage, and developing an entry strategy, you can effectively expand your product's reach and increase revenue potential.

Part 2: Translating Government Work into Commercial Credibility

Purpose: Leverage defense and government sector successes to build trust in the commercial market. By highlighting your experience working with high-profile government agencies like the DoD, NASA, and others, you can strengthen your brand's credibility and appeal to commercial buyers.

Strategies:

  1. Highlight TRL Progression and Validation from DoD/NASA:
    Demonstrating that your technology has successfully progressed through key Technology Readiness Levels (TRL) and has been validated by esteemed agencies like the Department of Defense (DoD) or NASA establishes credibility and proves your solution’s robustness.

  2. Leverage Letters of Support as Third-Party Credibility:
    Secure and showcase letters of support, endorsements, or partnerships from government agencies. These can serve as powerful endorsements that vouch for your company’s reliability, impact, and technical expertise.

  3. Create Case Studies Based on Successful Pilots or Demo Results:
    Develop compelling case studies from successful government contracts, pilots, or demonstrations to illustrate how your solution works in real-world, high-stakes environments. These case studies can directly relate to commercial market needs, making your product or service more attractive to potential buyers.s

Tool: Defense-to-Commercial Case Study Builder

Goal: This tool helps you structure a narrative that connects your government experience to commercial applications. By translating government projects into proven results, you can more effectively build credibility and trust in the commercial space.

Part 3: Navigating IP & Data Rights

Why It Matters: Your ability to successfully commercialize technology developed with government funding can hinge on securing ownership or clear rights to intellectual property (IP) and data. Understanding the intricacies of IP rights, especially when government dollars are involved, is essential to avoid legal challenges and ensure that your startup retains control over valuable innovations.

Checklist: IP Risk Assessment

  • Understand Funding Terms: Review the terms of any government contracts or grants (e.g., SBIR, STTR) to determine who owns the intellectual property and data generated during the project. Government funding often comes with specific rights that may limit your ability to commercialize technology.

  • Identify Data Use Restrictions: Determine if the government has any rights to use the data generated or if you are restricted in how you can share or license that data to commercial entities.

  • Clarify IP Ownership: Ensure that ownership of patents, trademarks, and other IP resulting from government-funded projects is clearly defined. Often, the government retains certain rights, such as a license to use the technology, but you may still maintain full ownership of the IP.

  • Assess Future Commercialization: Identify potential risks to commercialization due to any limitations on IP or data rights. For example, if the government holds certain licenses or control over your technology, you may need to negotiate terms for broader commercialization.

  • Coordinate with Legal Counsel: Engage legal professionals who specialize in government-funded IP to review your agreements, negotiate terms, and help you secure full commercialization rights when possible.

Resources:

  • SBIR Data Rights Summary Guide: This guide provides a detailed explanation of the data rights associated with SBIR-funded projects, including the government’s rights to use or distribute the data, and how to protect your intellectual property in the process.

  • Government-Funded IP Legal Templates: A collection of legal templates and standard clauses for IP agreements when working with government-funded projects, ensuring that you properly address ownership, data rights, and commercialization provisions in contracts.

Goal: By understanding the complexities of IP and data rights in government-funded projects, you can protect your technology and ensure that you retain the necessary rights to commercialize your innovations. This proactive approach reduces legal risk and positions your startup for future growth.

Part 4: Building Commercial Traction

Approaches:

  1. Pre-sell to Strategic Buyers (e.g., telecom, agriculture, logistics):

    • Target strategic buyers who can benefit from your technology early on. Pre-selling allows you to generate commitment and gather feedback before full product development, reducing risk and ensuring that your solution aligns with market needs.

  2. Form Early Pilot Partnerships with Shared Risk/Reward:

    • Engage with early customers to co-develop or pilot your product, sharing both risk and reward. This not only helps you refine your product but also strengthens customer relationships, providing valuable proof points for future sales.

  3. Price Based on Value Delivery, Not Cost-Plus:

    • Instead of basing pricing solely on production costs, focus on the value your product delivers to customers. This approach can command higher prices and align your product with customer needs and outcomes, ensuring better market positioning.

Tool: Commercial Readiness Scorecard

Goal: This scorecard helps you assess the commercial readiness of your startup by evaluating key areas like buyer persona clarity, revenue model, sales channels, and pricing strategy. By identifying gaps and prioritizing improvements, you can create a more effective GTM strategy and build early commercial traction.

Part 5: Corporate Partnership Pathways

Goal: Leverage defense momentum to unlock strategic partnerships with commercial leaders. By using the credibility and success gained from defense contracts, you can open doors to high-value commercial deals and expand your market reach.

Targets:

  1. Tier 1 Aerospace & Defense Primes:

    • Partner with leading aerospace and defense contractors who are key players in the industry. These companies offer significant collaboration opportunities, especially when your technology aligns with their needs.

  2. Satellite Operators:

    • Engage with satellite operators who can benefit from your technology, whether it’s through cost-saving solutions, improved operational efficiency, or new capabilities that enhance their service offerings.

  3. Supply Chain & Infrastructure Giants:

    • Establish partnerships with major supply chain and infrastructure companies. These organizations can benefit from advanced space-based solutions, like satellite communications, logistics, and real-time data insights.

Tactics:

  1. Tech Integration Pilots:

    • Collaborate with strategic partners to conduct pilot programs that integrate your technology into their existing systems. These pilots offer a low-risk way to prove the value of your solution while building a strong case for broader adoption.

  2. Joint Go-to-Market (GTM) Agreements:

    • Form joint GTM agreements with partners to leverage their established networks, marketing resources, and credibility. This can help accelerate market entry and drive awareness for your product.

  3. Co-Developed Product Extensions:

    • Work with partners to co-develop product extensions that enhance both parties’ offerings. This can create mutually beneficial solutions that address a broader range of customer needs and unlock new revenue streams.

Tool: Strategic Partner Fit Matrix

Goal: This matrix helps you evaluate potential partners based on key factors such as strategic fit, access to distribution channels, shared risk, and the pathway to generating revenue. By using this tool, you can prioritize the most valuable partnerships and strategically position your company for sustained growth.

Part 6: Export Control Considerations for Commercial Scaling

Reminder: Even as you scale commercially, international use of your technology may still be subject to ITAR (International Traffic in Arms Regulations) and EAR (Export Administration Regulations) compliance. Ensuring your technology is compliant with these regulations is essential to avoid legal and financial penalties, and to expand your market reach globally.

Checklist:

  1. Identify Technology Classification:

    • Determine if your technology falls under ITAR or EAR by reviewing its technical specifications and potential military or dual-use applications.

  2. Obtain Necessary Licenses:

    • If your technology is subject to ITAR/EAR, ensure you obtain the necessary export licenses for international sales or transfers.

  3. Understand End-User and End-Use Restrictions:

    • Review export control lists (e.g., Entity List, Denied Persons List) to ensure that your technology is not being sold or transferred to restricted parties or for prohibited uses.

  4. Monitor Compliance During Commercial Transactions:

    • Implement regular audits and checks to ensure ongoing compliance with export regulations in all commercial dealings, including sales, partnerships, and licensing agreements.

  5. Consult Legal Counsel:

    • Work with legal experts specializing in export control laws to navigate the complexities of ITAR/EAR and ensure that your business practices align with all necessary regulatory requirements.

  6. Train Internal Teams:

    • Ensure that your internal teams, especially sales, marketing, and product development, understand export control regulations and their responsibilities when engaging with international clients.

Goal: By following this checklist, you can ensure that your commercial scaling efforts remain compliant with ITAR/EAR regulations, allowing for smooth international expansion while avoiding potential legal pitfalls.

ITAR & EAR Compliance Resources

SBIR Data Rights & Licensing

  • SBIR Data Rights Tutorial
    An online course exploring key points about SBIR data, including civilian and defense data rights clauses, Phase III significance, and licensing.
    SBIR.gov​SBIR+1SBIR+1

  • How to License SBIR Data Rights
    Discusses critical elements of a license, why SBIR/STTR-funded firms cannot transfer Phase III rights through a license, and how to license with a prime through a subcontract.
    SBIR.gov​SBIR

  • The Federal Contractor's Guide to Data Rights
    A guide detailing the allocation of rights, including the government's unlimited rights in certain data and how to protect your intellectual property.
    Acquisition.gov​Acquisition.gov

Export Control Checklists

Jason Leo Carvalho
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