Fairlead Integrated launches venture fund to back autonomy and AI startups for naval platforms

bought a small equity stake and serves as a minority owner and strategic adviser, but no outside corporation holds a controlling interest. Anyway, is Jim available? Let's bring him into the studio. Welcome to the show, Jim. Nice to meet you. Thanks so much. That was fantastic. Yeah, we appreciate and privileged.

Yeah, we're really excited to have you here. Uh, would you mind introducing yourself and a little bit about the company? I gave a little bit of an overview, but I'd love to hear it from you. Uh, certainly. James Blum.

I run corporate development on behalf of Jerry Miller and Fred Pasquin, the president, uh, who's running Fair Lead.

and we've rebranded into uh we've now turned it into Fair Lead and we have Fair Lead Ventures which we announced earlier today and very privileged to also partner with Draq and that announcement is uh coming out any any moment as I as I understand from Phil and the team and at Fairlead we're very privileged systems engineering ship building ship repair and then we work on many different advanced energy challenges that the Navy um has experienced and wants to integrate and adapt and and apply and we're very fortunate to do what is known as commercial offtheshelf integrations and then harden those integrations from the world's leading industrial manufacturers and integrate them into Navy platforms and very fortunate to support the Navy and work on a number of different key initiatives across the maritime industrial base.

We're part of the submarine industrial base and we're we're fortunate to work on some very important problems around Colombia and the Virginia class.

And then we do a lot of modular ship building uh around aircraft carriers and all the the latest designs that are coming out and applying a lot of different autonomous capability uh to our aircraft carrier uh fleet.

And then we're working very closely with the destroyer class as a platform and working on um applying a lot of next generation energy capabilities so that they can be integrated for lasers and hypersonics.

And then lastly, we worked very closely across the USV space really applying very very hardened military uh industrial systems engineering and and critical engineering capabilities where you're you're really classifying a new set of softwaredefined infrastructure that's being um cascaded and fused across all the different platforms.

So they're more intelligent, more capable, and and and can move faster and and address a different lethality uh capability that we've faced in the past, and now we're we're upgrading and and ready for maritime dominance under the executive order that our president uh just uh announced and and then obviously with the office of ship building coming in, yeah, ship building and ship repairing our maritime dominance is something that we're privileged to support the community around.

So we're we're really augmenting and accelerating what I would call that next generation of hardening and that capability of engineering that is critical from a quality and control and speed perspective.

And so that's what we're doing at Fairlead and that's why we uh created a venture arm and we actually launched it and announced it today and we're we're backing emerging managers who are leading in autonomy and AI and applying autonomy and AI and machine learning some of the most important weapon systems uh for for our country and as well as to afford us that capability and deterrence and and all the key theaters that our commands are responsible for addressing.

So that's very nice to be here on the Yeah. Thanks. Yeah. Yeah. So, is it is a new fund f is it would you call it a fund of funds or you're investing in in managers or in and direct investments or or what's the focus? Yeah, we're the two ladder.

So, we're really focused on backing the best emerging managers in the space and the best founders and entrepreneurs in the space.

And that's what uh Phil uh from from DRA uh is a amazing example of and we're just really really fortunate to bring that kind of model based manufacturing, you know, into ship building now and in one of the key areas in the country which is Norphick and Hampton Roads and um Virginia Beach and then Portsmith. So, yeah.

Ho how is uh one of the the you know Phil is extremely eloquent and uh brought up a bunch of interesting data points on the 15 minutes he was on before this. One of which was uh the United States what what we make one submarine a year at this point takes about China makes 18 months he said China makes around 10 a month.

How does fair lead think about you know helping close that gap over time?

Well, we we believe that the key is workforce development and capacity and capacity planning and these these systems are very exquisite and they require extraordinary amount of testing and certification and when you want to apply next generation technology you really have to have all those processes in place.

So where fair lead you just sought out from a strategic planning perspective, we've really as a brand and under Jerry Miller and his leadership and Fred Pasquin, the entire company is dedicated to quality and to speed at scale.

And so for us, we sought out, you know, a company that was doing exactly what Phil and Pete and, you know, Jared and Trevor were building. And build OS for us was the software that was going to help us really accelerate that schedule and address that schedule risk you were just talking about.

And so yes, uh the Navy and all of its partners across the def defense primes, uh you know, across the Navy, all of them, uh shall I say the Heritage Primes and the new Neor Primes, everyone has to actually help, you know, General Dynamics and Electric Boat move faster as fast as they can.

And they're an extraordinary company with extraordinary leadership, but there's a lot of technology and complexity that has to be integrated. And then quite frankly from a ship building perspective that production schedule is is very challenging.

And so getting it getting it to a position where it can introduce effectively two to three more subs over the next 5 years. So instead of um deploying and introducing one new submarine or or two in a year to up to three to four.

That's going to take a very very very heavy lift from the ecosystem and fairly part of that ecosystem.

And we think with Draq and and that modernization and that single source of truth that they bring will help a firm like ours cascade and accelerate that entire industrial defense supply chain base around the Colombia and Virginia class submarine manufacturing process and we think we should be able to advance it rather rather significantly.

But what we're talking about is really moving in production schedules from 2035 and 2030 into 2028 and 2027.

And so that's a very hard lift uh for the Navy for its defense primes and we're we're certainly with Dra going to impact that schedule and we think we could have a a major impact not just on the acquisition in delivery side but also the sustainment side which is a really important part of actually if you look at you know how all wars are won they're won through sustainment and their supply chain and we're really excited about that at fair lead to really you know reducing and mitigating a lot of that risk across the suppliers and across the defense industrial base supporting uh the great submarine industrial base that we have in our country and that leadership.

I'm sure a lot of founders of new defense tech companies would love to do a deal with you or sell into a company like Fairlead. Can you walk us through um what it takes for a young company to prove that they would be uh the right choice for a partnership with a more established company like yourself?

Uh what's the conversation like? What are the KPIs? What are the things that you need to do to derisk taking a chance on a new and growing company? Sure. Such a great question. Uh succinctly, they believe in a center of excellence.

So from our perspective, the leadership team and their engineering and I'll just say all across product, all across engineering and the founders are hap have to be committed to addressing the ecosystem.

So what that means is literally actively having the forward deployed engineers be there to build up that new system of record with their own solution engineers and architects but they literally will advance training for that workforce uh development that workforce education and then scaling that over a 36 to 48-month time frame.

So as a result that then means that the founders and their founding investors have to have patient capital and capital from what I would call remarkable venture firms and growth equity firms.

And then they have to have a deep capital base because this is a very these are these are three to five year sprints and and the goal is to move at scale and then you're training and upskilling and then really attracting extraordinary engineers the best builders in our country to actually a new space for them which is maritime and this maritime industrial base for maritime dominance that requires a heavy lift on an earlier stage firm.

So what I would say is almost series B and series C firms in general are a better fit unless of course they have leadership that is extraordinary and deep like DRA is and is a great example of significant expertise in the maritime industrial base.

significant un understanding of how electric boat and general dynamics actually works as a company and then having that knowledge and then being able to scale that knowledge, build that into a software system which be is a platform that we can integrate all of our ship building and our systems engineering and a lot of the product development that we do and then applying a lot of autonomy and AI stack into that from a work assembly perspective from a modularity perspective that is uh that's a heavy lift for most companies.

DRA had all of the above and then they had extraordinary um founding investors behind them from a seed perspective and then they have a broad ecosystem support across what I would call the venture capital stack and that capital investment partnership that they have cascading across the country both on the east coast and the west coast meant for fair lead they had mitigated all the risk for us as well as the maturity of their software and then their commitment to build a center of excellence in Norphick around that entire community where the Navy has a very significant amount of its fleet and manufacturing base.

So those were the key requirements and I would say that they also had the technology roadmap that we thought was absolutely core and critical to us and we'd been seeking that out for the last nine months under Fred Pasquin and Hal Barge and how really leads that for fair lead and he was extraordinarily impressed with uh the presentation by Jared and and and and Phil and just to give you a sense of how fast we move.

We moved from meeting them to actually executing a purchase order and agreement and a commitment to getting trained and scaling this fairly in under three and a half weeks. That's how fast we move at speed and scale.

So for any founder out there who believes that they have the next piece of the core tech stack that will unlock capacity, scale, and autonomy and manufacturing for our country.

Yeah, we can we we move much faster than most industrial enterprises and we're that's why we have a venture arm that we launched because we wanted to back that with capital in addition to being a great customer and a great partner. That's very cool.

How how is fair lead uh thinking about uh opportunities to support uh various primes on smaller autonomous systems? It's obviously very different, you know, uh, manufacturing process to make, you know, a thousand of something versus, you know, one or two of something. Uh, and I know it's top of- mind, uh, for you guys.

Yeah. So, well said. We began this journey back in 2015 really trying to back as many new founders who were really early in that smaller autonomous stack. And so we're just been very fortunate to back a number of new and traditional players in the US space.

And we really started really on the system engineering and systems integration side.

And we have found now that we're really we've been very lucky that the Navy has been so supportive of us that we're now working with all many of the of the brands who are out there who well well um well published doing an incredible job raising capital doing an incredible job um pioneering and what I would call smaller hybrid fleets and introducing new port capabilities terminal capabilities the full value chain and so we're just really privileged to work with you know what I would say um the new entrance to the space as well as uh the heritage players.

And what we're fortunate to say is we're working with almost all of them. And we really take it from a software and systems engineering perspective.

And what we're really trying to do is harden the navigation systems, harden the the autonomous systems from cyber attacks, um building out mission modules and payloads to support them.

So, as you know, many of these remarkable firms with remarkable capital are really building out these new vessels, which are we need and are fantastic.

But actually integrating that from a payload and cargo and high value, high consequence cargo perspective, that's actually an extraordinary, shall we say, level of systems integration that's needed. We just feel like we're we're just a natural partner and the majority of the industry has selected Fair Lead.

So we we look at everybody as a partner and we're we're really looking at their timeline to accelerate production so they can field and get tested and certified and introduced into theater and so that we can address that schedule risk that our president and you know our new secretary of the Navy is very very adamant about reaching.

And so we just feel that we're just we're we're we're very lucky to be in that position to have the resources, the assets, the real estate, the capital, the leadership, the expertise, and quite frankly, we're now actually a prime ourselves. So been very very fortunate. Great. Congratulations. Yeah. Thank you.

Well, James, if you've ever uh if you ever want us to come podcast on a submarine, let us know. We're here. We're here. We're ready. Gentlemen, we'll introduce you to all the right people. We privilege. Great. Very honor. Congrats on the launch of the new fund. the partnership and it's it's great to chat with you guys.

Thanks for all the context. Yeah, we'll talk to you soon. Have a great one. Bye. Thanks so much. Take care. Bye. Cheers. And next up, we have Jacob from New Limit talking about life extension. Can you live forever or are we trapped in this mortal coil? We will get to the bottom of it.