DIU Decoded: The Startup’s Guide to Winning with the Department of Defense
The Pentagon Wants Your Startup—No, Really
Imagine this: You're pitching your AI-powered logistics platform or drone-based sensor tech, not to a venture capitalist in a glass high-rise, but to a team at the Department of Defense. And instead of asking for equity, they're offering a prototype contract—fast.
Sound crazy? It’s not. Thanks to the Defense Innovation Unit (DIU), startups and commercial tech companies now have a direct line to the Pentagon. This isn’t some slow-moving, red-tape-filled procurement process where contracts take years to materialize. DIU moves fast—by government standards and even startup standards—connecting innovators to the DoD’s most urgent needs.
The mission? Bring Silicon Valley speed and ingenuity to national defense.
DIU has already launched hundreds of pilot projects, from autonomous maritime vehicles to cybersecurity platforms, with startups that didn’t have a single previous defense contract. And now, they want you—your tech, your brainpower, your startup hustle.
If you’ve ever wondered whether your product could make an impact beyond the private sector—or if the phrase “dual-use” has popped up in your investor meetings—keep reading. You’re about to learn how to become a government supplier without a PhD in federal procurement.
What Is the DIU, and Why Should Startups Care?
The Defense Innovation Unit (DIU) is basically the government’s way of saying: “We see what you’re building—and we want in.”
Launched in 2015, DIU was created to bridge the massive gap between fast-moving commercial innovation and the often sluggish world of military procurement. Its goal? Help the Department of Defense tap into emerging technologies from the private sector—especially from startups and small businesses that would never touch a traditional defense contract with a 10-foot pole.
Think of DIU as the front door for commercial tech to enter the Pentagon. No defense pedigree required. No need for prior contracts or a Rolodex of generals. If you have a product that works—and it can solve a real, defined problem for the military—DIU is your in.
So, why should you care?
Because DIU has:
Funding – They fund prototype contracts, and if successful, those can lead to production-level deals worth millions.
Speed – They use a streamlined contracting vehicle called the Commercial Solutions Opening (CSO) that allows them to move from pitch to prototype in months, not years.
Access – Working with DIU means real exposure to mission users, program offices, and yes—even other government buyers.
Industries DIU is investing in:
Artificial Intelligence / Machine Learning
Autonomy (think drones, robots, and driverless tech)
Cybersecurity
Human Systems (like training, wellness, wearable tech)
Advanced Energy & Materials
Space & Satellites
If your product can help warfighters move faster, safer, smarter, or more efficiently—DIU wants to hear from you.
The DIU Playbook: How the Process Works
If you’ve ever tried to read through a government RFP and felt your soul leave your body somewhere around page 47, you’re not alone. Traditional federal procurement is a black hole of time, jargon, and frustration.
But DIU? They're flipping the script.
They’ve created a fast, founder-friendly process to get your technology in front of DoD decision-makers—without drowning you in red tape.
Here’s how it works:
Step 1: Find a Solicitation That Matches Your Tech
Start on DIU’s Active Solicitations Page. These are open opportunities where the DoD has a defined problem and is actively looking for commercial solutions.
Each solicitation includes:
The problem statement
Key requirements
Submission deadlines
What success looks like
Step 2: Submit a Solution Brief
This is your foot in the door. It’s a short proposal (2–5 pages) that clearly explains:
What your product is
How it solves the military’s problem
Why it’s mature and ready to test
What sets you apart
No 100-page technical tome. Just a tight, focused pitch—DIU-style. (More on this in Section IV.)
Step 3: Live Pitch
If your solution brief gets selected, you’ll be invited to pitch live to DIU’s technical team and DoD end users. It’s like Shark Tank… but with camouflage and acronyms.
Here’s what they’re listening for:
Does this work now?
Can it solve the mission need?
Are you ready to prototype?
Bring your engineers. Show your tech. Be real.
Step 4: Prototype Agreement (OTA)
If you crush the pitch, DIU issues a prototype Other Transaction Agreement (OTA)—a flexible, fast contract (usually 12–24 months) to put your product to the test in a military environment.
This is where things get exciting. You’re getting paid to prove your product’s impact—with real users and real outcomes.
Step 5: Path to Production
If your prototype succeeds, DIU helps you transition into a full production agreement—without starting the process over. That means actual DoD agencies can buy your tech at scale.
The Live Pitch: It’s Like VC, but With Camo
So you made it past the solution brief stage—congrats! Now it’s time to pitch. But instead of dressing for Sand Hill Road and schmoozing venture capitalists, you’re briefing a room full of mission-focused engineers, program managers, and military end-users who care more about function than flash.
Here’s how to nail it:
Show, Don’t Sell
DIU evaluators want to see your tech in action. If you’ve got a demo, bring it. If you’ve got results, show them. This is not the time for fluff or future roadmaps—they want working solutions.
Bring Your Tech Leads, Not Just Biz Dev
You’ll get questions. Lots of them. Not just about your value prop, but about integration, timelines, technical dependencies, and how your product would hold up in an operational environment. Your CTO or lead engineer should be in the room.
Know the Mission Use Case
It’s not enough to say your AI tool is “scalable.” You’ve got to explain how it helps a Navy commander make faster decisions or how your drone tech improves battlefield logistics. Get specific.
Anticipate Their Concerns
They’re going to ask: Can you prototype this in under 24 months? Will it integrate with existing systems? Can your startup support the scale? Be honest—and have answers.
The bottom line? DIU wants partners, not promises. Be clear, be prepared, and be ready to move.
What Happens After the Pitch?
If your pitch goes well, you're not walking away with a handshake and vague "follow-up." You're walking into a real contract—a prototype agreement—that funds your work and opens the door to production deals.
What is a Prototype Agreement (OTA)?
It’s a flexible, fast-track contract that lets DIU fund you to build, test, and refine your solution in a government environment. No FAR clauses. No multi-year proposal battles.
Most prototype phases last 12 to 24 months, during which:
You get access to military users and feedback
You adapt your tech to real-world defense needs
You build trust with actual program offices who can later buy your solution
And If You Succeed?
Here’s the magic: if your prototype delivers results, you don’t have to start over.
DIU can help transition your prototype directly into a production contract—either with DIU or another DoD component. That means:
Repeatable revenue
Major credibility in government markets
A possible launchpad for working with other federal agencies
A successful DIU project can literally change the trajectory of your startup.
Should You Even Apply? (Yes—If You Can Say Yes to These)
Working with DIU isn’t for everyone. But if you check the following boxes, you might be more “defense-ready” than you think:
Do you have a working product?
This isn’t SBIR or basic research. DIU wants tech that exists and is ready to test.
Can you explain your value to the DoD?
If you can translate your product into a mission-specific solution, you’re ahead of 90% of applicants.
Is your product dual-use?
If you’re already in commercial markets and your tech solves a clear government problem too, that’s the sweet spot.
Can you support a pilot?
You don’t need a 500-person team, but you do need to deliver a functional prototype and support it through testing.
Are you open to working with government stakeholders?
There will be meetings, compliance requests, and timelines. But the payoff is real.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
