• Raised oversubscribed USD 503m SBIC Fund in only 3 months
• Following MotionSafe investment, fund is almost 35% deployed
• Fund has access to preferred deal flow via Critical Technologies (CT) designation

In the defense ecosystem, contractors jokingly refer to the gap between an exciting technology’s arrival and its full rollout within the Department of Defense (DoD) as the “Valley of Death.”

Established last year as a joint venture between two Colorado investment firms, ONE BOW River is finding plenty of opportunities to deploy capital in this space. The tie-up between Colorado Springs-based family office ONE Funds and Denver-based private equity sponsor Bow River Capital expects its inaugural fund, which closed earlier this year on over USD 500m, to be almost 35% deployed by year-end, Steve Joanis, a managing director at ONE Bow River, told Mergermarket.

The partners recently closed the third platform investment from Fund I, taking a minority stake in MotionSafe, which focuses on vehicle data privacy and security. The deal underscores ONE BOW River’s national defense-focused strategy, spanning areas such as the Golden Dome missile defense system, cybersecurity and counterintelligence, as well as data – segments where the firm helps bridge the so-called Valley of Death.

“We control that drawbridge,” said Joanis.

ONE BOW River aims to make eight platform investments plus tuck-ins for Fund I. In an increasingly volatile geopolitical environment fraught with international conflicts, there is plenty of scope to fund companies catering to defense. “So far, deal flow is not a problem,” Joanis added.

Though just over a year-old – it was launched in May 2024 – the joint venture leans on significant defense expertise. Since 2015, Kevin O’Neil’s ONE Funds family office had been funding companies created through the Catalyst Center for Technology and Innovation, housed in a historic 1890s train depot. “Kevin was investing with his own balance sheet, so they decided to form a private equity firm and teamed up with Bow River,” Joanis said.

O’Neil is now chief investment officer at ONE Bow River. Joanis himself, 58, is a veteran of the first Gulf War, a time when the military relied on tanks and helicopters, a far cry from today’s emphasis on special operations, drones and precision guided weapon systems. “How warfare is managed is different now,” he said. “We put fewer people in harm’s way. In 1991 we used maps for navigation – no GPS.”

Last September, the new firm went to market with its inaugural vehicle –ONE Bow River National Defense Fund—and by December had its investors lined up, Joanis said.

The oversubscribed SBIC fund closed in March this year, raising in total USD 503m, which was more than double its USD 250m target. The LP base consists of high-net-worth individuals, family offices, registered investment advisors and banks, rather than big institutions. The decision to target private investors, who tend to have faster decision cycles, helped the fund close in three months, Joanis noted.

ONE Bow River is the first PE fund to receive a Critical Technologies (CT) designation, giving it preferred deal flow from the government and access to low-cost debt, he added. The program is managed by the DoD’s Office of Strategic Capital in partnership with the Small Business Administration. The DoD has earmarked 13 critical technology areas for the program, of which six involve the data value chain. Eight small venture capital and debt funds are also part of the program with an average size of USD 100m, he said.

Funds licensed under the SBIC-CT public-private partnership must invest at least 60% in markets aligned with the 14 DoD critical technology areas including critical minerals and materials; domestic manufacturing processes and supply chain components for hardware-based technologies, according to a ONE Bow River press release.

The firm’s investments so far tick the boxes. The first deal, the majority acquisition of Blue Stack Technology, closed on 31 December 2024 before the fund had closed. The USD 50m investment was financed with a bank line, Joanis said.

The second deal was a small tuck-in for a future platform, a minority stake in Larx.io, an AI visualization company. “We reserve the right to do tuck-ins prior to the identification of a platform,” Joanis said, noting that Larx has “the optionality” to be either a tuck-in for Blue Stack or its own platform, which would entail ONE Bow River taking a controlling stake.

The third investment, MotionSafe, came through a member of ONE Bow River’s advisory board, who heard the company was raising capital. ONE Bow River partnered with MotionSafe’s incumbent investor on the deal but put in two to three times more money. “We more than doubled the round size,” Joanis said.

Though ONE Bow River doesn’t require a controlling stake to do a deal, its goal is to be MotionSafe’s majority investor within 24 months, he added.

MotionSafe delivers tech solutions that address the challenges of vehicle data privacy and security. It works with state, local and federal law enforcement customers including the departments of intelligence, homeland and national defense, he said.

“We felt we could bring them into the defense, intelligence, Department of State through the (Catalyst) campus,” Joanis said.