Today's episode explores three ideas that caught my attention:
① Government demand is not the same as government revenue: Steven explains why “the government needs this” is not enough for an investor. A real dual-use thesis requires evidence of a buyer, a budget, a contracting path, and people inside the government who can execute.
② Commercial-first companies need a distinct government strategy: Selling to the federal government is a completely different sales motion. Steven shares why companies should not let a speculative government opportunity distract from their commercial growth, and why the right specialist can help build a separate federal pathway.
③ Investor diligence has to go beyond the pitch deck: From SBIR awards to high-profile advisory boards, Steven explains why surface-level signals can mislead investors who do not understand the government market.
Steven spent two decades building a government contracting company before launching Black Prism, a venture firm focused on commercial-first deep tech companies with credible dual-use potential. In this conversation, he shares how he thinks about government buying behavior, federal sales, AI security, early-stage diligence, and the signals investors should look for before backing a dual-use company.
During our conversation, Steven shares:
Why the government is increasingly looking to buy commercial technology rather than build it internally.
How to distinguish a real government customer from a vague government-market claim.
Why a Phase I SBIR award does not automatically create lasting revenue.
How Hardshell is approaching data security in the age of AI.
Why stacked advisory boards should be reference-checked, not simply admired.
Why selling to the federal government requires a separate sales motion.
The questions every angel investor should ask before underwriting a dual-use opportunity.
What We Cover:
0:00 The government is buying, not building
0:34 Introduction
1:30 Why Steven moved from GovCon to venture
2:22 The government’s changing relationship with industry
4:03 Why private markets iterate faster
4:49 Commercial technology and national security
7:13 What dual use actually means
8:57 Building Black Prism Capital Partners
13:13 The calculated risk of launching a fund
15:03 Why raising a first fund is hard
18:11 VCs are founders too
20:15 Black Prism’s commercial-first thesis
23:19 The Hardshell AI security case study
27:07 AI, Neuromancer, and the singularity question
29:02 How to follow government money
32:50 Why SBIR funding is not automatically revenue
35:37 CSOs, OTAs, and government contracting pathways
37:32 What frustrates Steven about venture capital
42:06 Why stacked advisory boards are not enough
43:47 When dual use requires a specialist investor
47:39 Why government sales are different
49:38 The question every angel should ask
51:39 Final thoughts on dual-use investing
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All opinions expressed are personal and may not reflect the views of the individual’s organization or of The Diligent Observer. Not investment advice.
