Financing the Fight with Chris Lay and James Parker of Leonid Capital Partners

Building the Base

In this episode of Building the Base, Hondo Geurts and Lauren Bedula are joined by James Parker and Chris Lay, co-founding partners of Leonid Capital Partners, a private credit fund supporting the US national security ecosystem. Drawing from their unique backgrounds in astrophysics and neuroscience, Parker and Lay discuss how their innovative lending approach fills a critical gap in defense tech financing, offering credit facilities based on government contracts rather than traditional equity investments.

Five key takeaways from today's episode:

1. Traditional banks won't lend against government contracts due to 30-day cancellation clauses, creating a significant financing gap that specialized credit funds like Leonid can fill by lending 50-60% of contract values at set interest rates rather than taking equity stakes.
2. Trusted capital is essential for national security, with clean funding sources becoming increasingly important as private investment surges into defense tech, requiring deliberate vetting to avoid potential foreign influence or undue investor pressure.
3. Mission-driven business models can accelerate growth, with Leonid's commitment to donate 50% of profits creating competitive advantages through stronger relationships, advisory connections, and credibility with service-disabled veteran-owned businesses.
4. Policy changes could unlock more private investment in national security, particularly through preferential tax treatment for investors in critical defense initiatives while potentially removing tax advantages for investments in adversarial economies.
5. Cross-sector talent recruitment requires both patriotic appeal and economic incentives, with successful defense tech companies like Palantir and Anduril demonstrating that technical talent will engage with national security missions when there's potential for both meaningful impact and financial success.