How The DoD Is Implementing New Financial Tools

Jason Rathje is the Director of the Department of Defense’s Office of Strategic Capital (OSC). The Office of Strategic Capital’s mission is to attract and scale private capital in support of national security. The office is focused on the development and implementation of new financial tools to support and increase public-private investment in critical frontier technologies.

In an interview with Ernestine Fu Mak, Rathje discusses the critical role of private capital in strengthening America’s national security, the challenges of scaling deep-tech startups, and how OSC is leveraging innovative financial tools to bridge the “Valley of Death” for critical technology development. He shares insights from his journey—from MIT and the Air Force to co-founding AFVentures and now leading OSC—and offers a roadmap for aligning venture capital with national security priorities.

Steve Blank also provides special remarks. 

Key Takeaways

• Bridging the Capital Gap for Critical Technologies

  The U.S. government traditionally funds early-stage R&D, but private capital is needed to scale critical technologies like semiconductors, quantum, and biotech.

• Leveraging Government-Backed Loans Instead of Spending

  Unlike traditional defense grants and contracts, OSC uses financial instruments like the Small Business Investment Company (SBIC) program to mobilize private capital efficiently, ensuring long-term sustainability without direct taxpayer spending.

• The Shift from Capabilities to Components

  OSC is addressing supply chain vulnerabilities by investing in components—the building blocks of future defense and commercial technologies.

• The Power of Small, Focused Teams in Government Innovation

  A tight-knit, mission-driven team can create transformative change inside large bureaucracies. Rathje’s leadership in AFVentures and OSC demonstrates how strategic capital deployment can reshape defense innovation.

• Opportunities for Investors and Entrepreneurs in Defense Tech

  From early-stage startups to later-stage private equity, there is a growing opportunity to engage with OSC-backed initiatives. Investors looking for long-term, "patient capital" plays should explore how these financial structures can align with their portfolios.