Startup Investments Sharpen Focus on Innovation
When strategy and technology meet, a partnership is formed.
By Tracy Staedter
Nimble, hyperfocused and growth potential are words that inspire thoughts of startup companies. Whereas words and phrases associated with large corporations might include: having strong customer relationships, deep engineering and financial resources, and long histories of delivering ground breaking, high-quality products and capabilities. When these two concepts of companies connect, the sparks of innovation start to fly.
That's what happened when Northrop Grumman partnered with Philadelphia-based startup, Deepwave Digital, a developer and provider of radio frequency and wireless systems powered by artificial intelligence. The company's products couple hardware and software in a ready-to-go solution that speeds signal analysis, while reducing latency and the amount of bandwidth required.
"They've cracked a fairly niche technological problem that's going to become more important as the radio frequency spectrum becomes more congested with 5G, internet-of-things devices, drones and other aircraft," said Tony Long, the cofounder and director of Northrop Grumman's creativity hub, the FabLabs.
Thanks to a fortuitous meeting and an energetic hack-a-thon, the giant and the startup found they could leverage each other's strengths to push innovation. In December 2020, Northrop Grumman announced its most recent equity investment, a financial boost that helped Deepwave Digital close a $3 million fundraising round.
"The startup ecosystem is evolving at an accelerated rate. We continue to look for innovative companies that can provide discriminatory technologies to help us meet the warfighter's mission."
– Chip Walter, Senior Director of Strategic Ventures and Partnerships
Signal Synergy
As an experienced radio frequency and microwave engineer, Long knows a wireless signal innovation when he sees it. He first read about Deepwave Digital while on a trip to Philadelphia. Tony said he was intrigued as to how the company was using an artificial intelligence technique, called deep learning, to analyze radio frequency signals. "It was an approach I hadn't seen before," said Long.
By chance, the company happened to be located near Philadelphia, so Long set up a meeting with its CEO, John Ferguson, that week. No more than 30 minutes into the conversation, it became obvious that Deepwave Digital's solution could add value to Northrop Grumman's products and help meet customer needs.
To see whether a partnership made sense, Long and Ferguson agreed to throw a hack-a-thon at Northrop Grumman's FabLab in Redondo Beach, California. "It was a way to introduce their technology to our workforce, vet it and see what might stick," says Long.
Within a month of that initial visit, Ferguson was at the site in California, leading a 12-hour hack-a-thon of 40 people from across Northrop Grumman. Eight teams of five people, many of whom were entry-level engineers, competed in a simulation to see who could tweak the data or model to make them the most efficient.
One team came out on top, winning a much-coveted prize — "a pack of 1980s floppy disks," Long says with a chuckle. But it wasn't about winning. The hack-a-thon generated buzz across different organizations throughout Northrop Grumman, recruiting young engineers who may not have considered a career in artificial intelligence, and it helped Deepwave Digital refine its tutorial materials to make them more accessible to a wider range of customers. The partnership is also laying the groundwork for future startups.
"If there's a strategic alignment and the technology is solid, we're off and running towards a partnership."
– Chip Walter, Senior Director of Strategic Ventures and Partnerships
Staying on the Cutting Edge
"The startup ecosystem is evolving at an accelerated rate," said Chip Walter, senior director of strategic ventures and partnerships at Northrop Grumman.
Keeping pace with innovation is part of Northrop Grumman's culture. "We continue to look for innovative companies that can provide discriminatory technologies to help us meet the warfighter's mission," said Walter.
To that end, the company began accepting pitch deck submissions from emerging companies or white papers detailing their solution to the industry's most pressing challenges. If the technology addresses a customer need, aligns with their strategy, and the timing is right, it could be a perfect match and lead to a partnership. Northrop Grumman typically enters into one of three different arrangements: a teaming agreement, based on a request for proposal; strategic partnership, where both companies collaborate to solve a problem; or an equity investment, which provides an opportunity for a mutually beneficial partnership much deeper than a simple collaboration.
"If there's a strategic alignment and the technology is solid, we're off and running towards a partnership," says Walter.
It was certainly the case for Deepwave Digital. "The partnership moved from fun stuff to serious business pretty quickly," says Long. "We think there are good reasons for it. Our customer's missions are problems of national and international significance. Staying agile is the best way to respond."
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