Good news for doves: America's defense industry is beginning to produce entrepreneurs in addition to weapons. Consider the case of Peter Rothman and Maurice "Mo" Doucet. Frustrated after having spent a combined nine years creating intellectual property for their employer, a software-development outfit for the government, the two decided to take the entrepreneurial plunge.

In January 1993 Rothman and Doucet launched Avatar Partners, in Boulder Creek, Calif., to focus on commercializing what Rothman calls "leading- or bleeding-edge projects" that capitalize on the founders' government work in virtual reality, artificial intelligence, and advanced simulations. The two former defense contractors didn't go commercial cold turkey, however. Part of their start-up funds came from a U.S. Army grant of $50,000 through the Small Business Innovation Research program, and Avatar continues to stay afloat by taking on government projects in which Rothman and Doucet see commercial potential.

But Avatar is gradually branching out into the private-sector markets its founders envisioned. Its first commercial project was an object-oriented virtual-reality program developed in the course of an army design project involving tank controls. The company was also hired by Sense8, a Sausalito, Calif., virtual-reality company, to work on a product demonstration for a trade show. Now Doucet and Rothman face another market test: can they get commercial venture capitalists -- as well as government grant givers -- to back their company? Stay tuned.

-- Alessandra Bianchi

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