J2 Ventures, managed by US military veterans, secured $150 million for its second fund on Thursday. The Boston Company invests in companies with civilian and military goods.
This current fund is more than twice J2's $67.5 million launch fund from 2021, a significant success at a time when many young venture capital companies struggle to raise second funds, per TechCrunch.
Despite venture funders' rising interest in defense tech, J2 Ventures does not specialize in it. "Our portfolio is national-security-adjacent but not defense-focused," said J2 managing partner Alexander Harstrick. The company steers clear of defense-related technologies like drones, robots, and surveillance.
J2 Ventures invests in firms that improve the health and well-being of approximately 3 million US military personnel. Harstrick asserts that the Department of Defense has embraced new technology before its widespread adoption, including telemedicine and electronic health records initially utilized by the VA.
J2 Ventures frequently co-invests with top generalist venture capital funds in over 25 startups. The business is the sole institutional investor in Aalyria, Micron Biomedical, and Lumia Health.
Company advisor and former Defense Health Agency Director Dr. Raquel Bono remarked that the company is "doing fantastic work in areas that urgently need innovation." Bono said that she joined to help address major issues using technology. "I have not been disappointed," she said, according to the firm's media release.
Dual-Use Technology
The firm's healthcare, scientific, technological, and defense expertise makes them ideal leaders and investors in dual-use technology enterprises. Additionally, they assisted companies with over $3 billion in Department of Defense contracts.
Tasso, a needle-free blood draw tool, and Lumia Health, a cerebral blood flow tracker, are J2 healthcare investments. The company also invests in cybersecurity, infrastructure, and advanced computing firms, including Femtosense, which makes energy-efficient smart device AI chips.
J2 Ventures invests $1 million to $5 million seed funding for Series A startups. The New Mexico State Investment Council and JPMorgan are limited partners.
Harstrick, a former Army Reserve military intelligence officer who served in Iraq and Afghanistan, leads the business. Before creating J2, he invested in the Defense Innovation Unit.
Technology Helps Address Conflicts
In a Bloomberg column, Harstrick underscored that people win conflicts, not technology, though it "certainly helps." He explained how commercial capital investors close the innovation gap by expediting battlefield solution development before conflicts.
Foreign crises such as Ukraine demonstrate the importance of private backing for defense innovation, Harstrick said. He recommended that government procurement make simple changes to deepen this connection.
According to the US military veteran, small troops fighting fiercely in Ukraine have demanded equipment from conventional technological marketplaces, including online-purchased ISR drones. These troops utilize civilian ride-share systems for logistical and personnel mobility intelligence and social media for medical information.
Harstrick suggested that the United States study the effectiveness of commercial technology modified for military use. He noted that the US should optimize this encouraging private sector-driven innovation trend. He called this a fundamental change from top-down command and control to defense procurement.
