Building the DICE Alliance: How San Diego Can Lead in Defense and Dual-Use Innovation

How do smiles and high fives drive defense innovation? Find out today. Welcome to The Connect Current, the flow of innovation in San Diego. We bring you the founders, investors, and leaders building the future across life science, tech, climate, defense, AI, and more. This is where San Diego's next chapter takes shape. Welcome to the Connect Current, the flow of innovation in San Diego. I'm your host, James Zanewicz, and this episode is being recorded at the UC San Diego Park and Market building, and we want to thank them for that support. Today, I'm joined by Rachel Costello, one of my favorite people in the world. She is the Director of Innovating for National Security at UC San Diego and the co-founder and CEO of Bonavita Ventures. Rachel works at a powerful intersection of national security, university-based innovation, and venture building. This makes her the ideal guest for a conversation about what it would really take to strengthen San Diego's role as a defense innovation hub. And that's also things that other defense innovation hubs can learn from as well. This episode is centered on the vision behind the DICE Alliance, how to better connect public and private stakeholders, support dual-use and defense-oriented startups, and help San Diego translate its enormous defense research and technical assets into a more coordinated innovation engine. Welcome, Rachel. So glad to have you here.

Thank you so much, James.

So, for listeners that are first hearing about the DICE Alliance lens, I guess a 2-part question. What is the DICE Alliance, and why are we in San Diego so uniquely positioned to become a true defense innovation hub? So, you can tackle those however you want.

DICE Alliance was started 5 years ago to make sure that defense-adjacent industries, investors, and builders come together in a very low-barrier environment where they can meet. San Diego is uniquely positioned to be the epicenter for defense technology innovation, and the reason is we have proximity to end users, we have world-class academia and research institutions, and we have talent.

Yeah, and one—

The 3 ingredients.

I love that, and one thing I forgot to ask, what does DICE stand for? It's D-I-C-E.

Yes, it's not the roll dice like—

No, it's not.

Las Vegas dice, but it's a defense—

No Vegas.

Defense Innovation Community of Entities.

Oh, nice.

Right. We, you know, defense people love acronyms, so yes.

All right, and one of the core ideas behind it is bridging that public-private stakeholder group, government, academia, industry, and capital, which is always very important because, you know, the color that matters the most is often green. But in your view, what has prevented those groups from acting like one system, and what would better alignment look like? Because I know that's one of your main goals of DICE is to get that alignment going.

So, one of the barriers has been, I guess, the notoriety, because San Diego is known as the military town. So, most people assume there's already some established associations that, you know, facilitates meeting of minds. The problem was you have the old-school defense guys, and they're represented by people from, like, NDIA, FCA, Navy League, such.

Mm-hmm.

But we also have brand new young founders of defense tech coming up the ranks, and there was no way for them to meet for whatever reason. So, that's what DICE is all about, to bring in the old and the new together and talk about what they learn, what they know, and how they can move forward together.

Where have you seen kind of handoffs between that, that old group and that young group stall, or what have you seen make them really good?

It's like any convergence of old and the new. The old— older group may say, well, back in the day, or I did it this way, therefore you must do it this way as well. And the young sometimes don't want to know what dad or grandpa did. They want to do it their own way. But there are, you know, there are benefits for them to speak because the old— older defense tech industry people do have something to be, you know, something for anybody to learn from.

There's always a lot to learn from legacy. And, you know, I know that's a big part of DICE is making that bridge. So you have really reimagined what DICE looks like and how it functions. What does a fully functioning DICE Alliance do differently? Because I know you're still in the process of rebuilding, much like Kinect. We're in a rebuild year. You're in a rebuild period. What's your ultimate vision for what it does differently?

The old vision we have, and it's not my vision, it's our vision as a region, is have a platform a meeting space for new and old to come together and just talk. Hey, old industry, how did you get through this particular bump in the road? And the old folks could also ask the new, what are you doing different that I need to, I need to know about?

All becoming one. So, really that connective tissue for defense, which is why I think we align so well, and you and I talk all the time, is we have the same vision, and we work together all the time. But you also, you sit in a seat at UC San Diego with Venture Building as well. You get to straddle a lot of different worlds. What role should you now What's the university's play in a stronger defense ecosystem?

The university have amazing research capabilities and wealth of knowledge from over 30 years in most cases. The best way for university to position itself as a validator for emerging technology, then the inventors or founder from there could have a little bit more confidence that they're going the right way, and then that could probably lead to potential funding in the future. whether it's government or private capital.

And are there ways for companies to reach back to universities and leverage resources there as well if they're in a defense industry?

Absolutely. That's why DICE is here. DICE Alliance is what it's for. We're the door for them to come knock, and we'll be happy to introduce you to researchers and graduate students and even undergraduate students.

Yeah, and it's not just UCC. You are agnostic. You help across the entire innovation ecosystem.

Absolutely. So we work with our partners and our fellow academia San Diego State University, you got Point Loma, you got National University, and also Cal State University San Marcos. And because of my past affiliation up in Silicon Valley, you know, could reach out to any of the campuses up there also.

And I know a major priority for DICE is helping more companies become ready to work with Department of Defense, or DoD, as well. Where do startups and small companies get stuck when they try and engage in those defense markets and working with DoD?

One of the biggest barriers that early founders put themselves in is not figuring out who their customers are.

Mm.

And when I say customers, who are you solving the problem for through your product, whether it's service or, you know, MVP? And to do an initial discovery of your customer is super important. And unfortunately, many people Skip that.

How do you get them on that track?

They usually come knocking on the door after they fell on their face a couple of times. But we have workshop that we provide through the campus called Customer Discovery, and we're gonna probably kickstart that again in the coming summer and in the fall of next year. It's been very successful 'cause it's really, you start from the beginning by asking yourself, who am I?

Yeah.

And what is it that I'm, you know, who am I serving? And what would be this, the meaning of success? Not only for myself, but my customers.

Kind of back to some of those I-CORE basics, but really infusing it with a defense lens, which is different and has some special nuances to it.

Absolutely. For example, I often get questions about how do I get into doing defense business? So, I ask them which enterprise, and if I get the deer-in-the-headlight look, which means that they have not done the homework yet.

And, and with that homework, a lot of that is there are often dual uses. How do you navigate that with the DICE Alliance and the fact that there are often civilian and military applications?

Yes, well, you know, everything we do, all the technology that's been out for the last few years has really has both applications. It's very important for a company that already have traction with the commercial industry to maybe think about how that could apply to defense or national security application. And it's also very important for the founder of defense tech to first realize there's, you know, would there be an application beyond defense in the commercial world?

And with that, regardless which track you're looking at, you're often talking about pilot programs and embedded support. Where do you think, or what do you think, I guess, is a better question, founders and innovators need most in these early engagements to move from that promising technology to something that That's where the partnership with academia comes in.

We have research capabilities, we have partners where we have a very deep relationship with some of these, our defense national security partners. So, I would encourage early founders in defense technology to leverage that relationship. There's also wonderful small business development centers in this region, one in Southwest College, and then one in that USD, University of San Diego. And one right here at Connect. And one right here at Connect. So, there's a lot of resources out there. Right here in Georgia.

Yeah, we love our SBDC connection. I was about to bring that up. I'm so glad you did.

Yeah.

In addition, we always love giving our SBDC shoutouts. We have the EDC that has the World Trade Center SBDC. So as they're looking at expanding beyond the US, they can help with those borders too for the dual use. We talked about dual use. We talked about capital and green being very important. So I want to combine those because this is not just about government access. It's about strengthening that defense industrial base with private capital as well. So it's not all just funded by the government. How— if you put on your investor lens, because you've worked with a lot of investors over the years, how should they view the technologies coming out of San Diego? And what do we want them to know about San Diego and the companies we have in this space?

Well, the companies in San Diego are very strong in autonomy, robotics, AI, and data. They're strong in their research and development. What's lacking is that the research is there, The enthusiasm is there. They have not done enough diligence on how they could de-risk themselves to move forward. So they usually run out of money very early.

Yep.

Because the investor will write a check for like maybe $5,000, $10,000. They'll burn through it because they don't have the developmental or project management skills. So I think if I was an investor, I would be looking at what technical readiness level they are. It needs to be 4+ even 5, TRL 5, for investors to really think about investing unless your thesis is pre-stage, you know, pre-Series A or in pre-seed. And then where I think the investors just think about is the— what do they understand what investment means, you know, whether it's private capital or, you know, government. Does SBIR mean anything to them? So I guess asking them more questions, be a little bit more harder.

You mentioned TRLs, and a lot of people don't know what those are. So it's really common in defense, it's really common with the I-Corps program, but where a lot of these technologies come is spinning out of academia, and academics don't know about TRLs and often don't listen when you explain it to them. So when you talk about a TRL 4 or 5, what does that mean in English for the folks out there to know that this is the moment when you should be ready for your investor partnerships and bringing it forward?

So TRL, Technical Readiness Level, came out of NASA. It goes from 1 to 9, and it will— they'll determine where your product development is at the time. So for investors, I would recommend that consider early investment for maybe TRLs 5 and above. If it's any below that, if they're still in the ideation stage, may not get the return on investment that you're seeking.

Yes, we're looking at that stage where they kind of have established their market, they know what they're doing, they may not be out and selling yet, but they're darn close, and that investment is going to get them over that hump is kind of, kind of where we're at. I love that. Something we hadn't planned to talk about, but I do want to bring up is this year we had West in San Diego, which is here every year, but there was a new component of West that kind of incorporated a lot of what Dice is working on. Can you talk a bit about that and what you felt like that brought to San Diego this year?

So we went really big with the Five Eyes Alliance this year. And what Five Eyes is, is a consortia of UK, New Zealand, Australia, and Canadians. And in the past, we just did a Five Eyes panel at the West, but we celebrated our 5th year in existence here at Park and Market. And it was a really wonderful event, but it brought home how important it is for all of us to be working with our allies.

Innovating together, right? Because it is truly, you know, innovation is limitless. We always like to close on a traditional question, and that is everyone gets their inspiration from different ways in San Diego. And what drives your innovative flow? What drives your spark?

It's the smile on my students' face when they finally get it, get the concept. It's the high five I receive from a small business owner when they land their first contract. I travel globally, and it's always so wonderful that we as the United States is still seen as the beacon when it comes to innovation. That's what gives me my spark.

That's fantastic. I love that. I want to thank you for joining us. This conversation, I think, is incredible. I think it's going to bring a lot of exposure to an underappreciated industry here. And it's— we're so strong in defense innovation in San Diego, and we haven't talked about it. But also, I think a big part of that is that we haven't built the connective tissue that you're working so hard to put together with the DICE Alliance and with what UCSD is doing to help us operate like that true innovation ecosystem. And we love partnering with you on that and really appreciate you joining us today. Thanks for listening to the Connect Current. If you want to learn more about Connect and explore resources across San Diego's innovation ecosystem, follow us on LinkedIn or visit connect.org. We'll see you next time on the Connect Current, where San Diego's innovation story keeps moving forward.

This podcast was edited and produced by Resonate Recordings.