Big Red Ventures Fund Manager: Achint Agarwal
Interview with Bill Collier, Noblis Ventures
Big Red Ventures Fund Manager: Achint Agarwal
Achint: Looking at Noblis Ventures, I see you often invest in dual-use companies that have both military and civilian applications. How is your approach different from traditional civilian investments, and what specific challenges and opportunities do you look for?
Bill: We look for capital-efficient companies that either have established government relationships, like Scout, or have commercial traction and a desire to sell to the government but do not know how to do it. Our parent company, Noblis, generates $750 million in revenue, acts as a prime on over 200 contracts, and its sole customer is the US government. We act as a bridge. As part of our diligence, we identify prime contracts across our business units that we can leverage, and after investing, we bring those technology companies to our customers to expand their revenue. The challenge is that the sales cycle is much longer and there is a lot of uncertainty. For example, Scout was supposed to get a $23 million TACFI contract award over three years, but disruptions and government shutdowns delayed it past 2025, which meant we did not meet our revenue projections.
Achint: Given those long cycles and potential delays, how does that affect valuation and return expectations? Do you still look for a traditional 10x return, or is the math different?
Bill: A 10x return would be great, but for us, a home run is the expansion of revenue with those prime contracts. If we have an existing contract with the DoD or NASA and Scout helps us expand it by 15% upon renewal, that is a win. We skew early-stage—pre-seed up to Series A—because we want our $500,000 or $2 million check to be valuable enough to gain influence. If we write a small check in a $100 million round, it is a drop in the bucket. With Scout, we have invested $3 million of their $9 million raised, giving us about 10% ownership before their Series A. This allows us to have the relationships and influence needed to direct them to the right customers.
Achint: With smaller checks aiming for a larger share and more influence, is your ultimate aim to acquire the companies you invest in?
Bill: In our deal documents with Scout, we do have the first right of refusal to acquire them before another acquirer comes in, though it is not likely to happen. Scout is a bit of an outlier because it has a capital-intensive hardware component, which is why we have invested $2.7 million in them out of the $4.5 million we have deployed since inception. We are heavily over-indexed there. For our other investments, which are pure software businesses, we write smaller checks at higher valuations, giving us smaller ownership stakes like 1.7% in Sedaro and 4.5% in Prediction Guard.
Achint: The structure of Noblis is quite unique, with a non-profit parent company and a venture capital arm. How do those diametrically opposite mechanics affect company culture?
Bill: Noblis is a heavy research and development organization with about 3,000 employees, 60% of whom are advanced PhDs. We operate under a similar structure to In-Q-Tel. On the venture side, we are very lean—it is just myself and Matt Monaco, who has been with the firm for 18 years. Since establishing Noblis Ventures in 2023, it has definitely been a culture shift. Our CEO brings us into internal R&D meetings to ask what is novel in the market and where we should parse out funding. We are definitely a bit more intense than other areas of the business, but the executive team sees us as disruptors who can invigorate internal development and bring more rigor to day-to-day operations.