- Invests in mid-market defense, aerospace, government companies
- ByteCubed offers business intelligence, data analytics
- Founded by Ahmad Ishaq, Afghan asylee and entrepreneur
Enlightenment Capital’s investment in ByteCubed, announced last week, represents a bet that a relatively small player can hold its own in a space that includes behemoths like Booz Allen Hamilton and SAIC.
Based in Arlington, Virginia, ByteCubed provides technology and consulting services to federal and commercial clients. The company’s most interesting offerings are its business-intelligence solutions and data-analytics platform, Enlightenment Managing Partner Devin Talbott says.
“ByteCubed is a well-known technology hub in the Northern Virginia government-contracting community,” Talbott told Buyouts.
“The business is deeply embedded with their customers, and they’re coming up with really creative and forward-leaning solutions to the federal and commercial problem sets they’re dealing with. If you were to visit the business, you’d feel like you were in Silicon Valley, as opposed to Northern Virginia.”
Talbott wouldn’t discuss Enlightenment’s plans for the investment in any detail: “Our focus is supporting management teams that can punch above their weight class, and helping them develop their business, expand their capability sets and grow within their target markets.”
He said that Enlightenment had gotten to know ByteCubed’s founder, Ahmad Ishaq, and that the deal was done without bankers on either side. Terms weren’t disclosed.
For Ishaq, who came to the U.S. from war-torn Afghanistan as a child, a post-college internship at the Department of Defense led to a job as a government program manager.
As he told Inc. in 2016, “I moved to a big defense contractor but quickly got frustrated with all the bureaucracy. I wanted to do work that actually made stuff better for the government, not spend my days dealing with internal red tape.” He founded ByteCubed in 2011.
“There’s a lot of pressure on senior government officials right now to modernize and make better decisions with limited resources,” said Jason Kaufman, president and M&A practice lead at Chertoff Group, an advisory firm focused on security and risk management.
“Increasingly they’re turning to high-end consultancies to help them navigate those challenges, and that’s really where ByteCubed sits. … Think of it as decision support around planning for how to introduce innovation into your agency.”
“They’re small, they are below $50 million in revenue, competing in a market against $5 billion competitors,” Kaufman said.
He explained that preferential programs and incentives for small businesses are an important dynamic in the defense contracting industry: “It’s really a way for the government to encourage entrepreneurship and innovations. Companies can grow very rapidly operating in that preference zone, but you get to a point where you have to start being able to compete in what’s called full and open competition. Making that leap … is hard, and there’s often a need for capital to bridge that gap. That’s one of the unique things that investors like Enlightenment Capital do.”
Founded in 2014 and based in Chevy Chase, Maryland, Enlightenment is well-connected in the aerospace, defense and government sector, with an advisory board that includes Bob Work, deputy secretary of defense from 2014 to 2017, and James Cartwright, retired Marine general and former vice chairman of the Joint Chiefs of Staff.
The firm makes senior-debt, mezzanine-debt and equity investments in middle-market businesses. Last year, Boeing bought Aurora Flight Sciences, a drone company in which Enlightenment had invested in 2016.
Action Item: Check out Enlightenment Capital’s Form ADV here.
An illustration picture shows a projection of binary code on a man holding a laptop computer, in an office in Warsaw on June 24, 2013. REUTERS/Kacper Pempel