The hunt for a £20m unicorn: MOD's Dragon's Den-style bid to lure startups

The Ministry of Defence is launching a £20 million pot of "accelerated contracts" for small British startups, alongside a Dragon's Den-style pitching event for ideas.

Defence Secretary John Healey described it as the hunt for the UK's next "defence unicorn" – using the tech term for a privately held startup valued at more than US$1 billion.

"This is about a Britain that rewards risk takers and innovators and gives people the belief that this government will back them," he said.

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Speaking at the ADS (aerospace, defence, security and space industries) Annual Dinner in London, Minister for Defence Readiness and Industry Luke Pollard told the room: "Somewhere in this country – maybe in this room tonight – is a company that will transform how we fight."

He described the ambition as "a British company, solving global defence problems, selling to the world."

Unicorns explained

The MOD defines a unicorn as "a privately held startup valued at more than US$1 billion". 

Examples of UK unicorns include companies such as Deliveroo, BrewDog and Starling Bank.

The MOD says the contracts through the fund will give companies "the foundation and confidence to raise private capital to expand more rapidly".

The only requirement outlined so far is that the company needs to be British. 

"And for avoidance of doubt, if you've got a British postcode, you are a British company," Mr Pollard said. 

MOD Dragon's Den 

Mr Pollard said the MOD will also run a Dragon's Den-style event to provide seed funding for new ideas at an early stage of development.

The MOD says the pitching event is aimed at supporting ideas "before businesses have got off the ground" and will involve a Defence Investors’ Advisory Group intended to connect companies with private finance.

Projects will be grouped under themes including AI, machine learning and data science; robotics and autonomy; and enhanced precision weapons.

The MOD says it is trying to reduce the friction that smaller firms often complain about when dealing with defence procurement.

It points to new 'Lite' Enterprise Agreements, described as a way to help speed up processes and attract software and AI companies by reducing "commercial barriers".