(FORTUNE Magazine) – Ever since the end of the Cold War, defense contractors have tried--and mostly failed--to find commercial uses for their military technology. For every huge success like Qualcomm's wireless standard, which started as a defense project, there have been hundreds of quiet failures.

Enter Milcom, or Military Commercial Technologies, an Orlando venture capital firm and high-tech incubator. Founded in 1997 by a group of ex-military advisors and tech executives, Milcom claims it has a winning formula for bringing defense technology to the public sector. It partners with big contractors like ITT and Lockheed Martin, licenses or buys their most promising projects, and creates startup companies to sell them. In exchange, the defense contractors get equity stakes in the startup companies, plus engineering fees or royalties. It's a low-risk strategy, given that the research and development costs--normally the priciest part of creating new technology--are already paid for.

Since its launch in 1997, Milcom has raised over $200 million from investors and hatched seven portfolio companies. All sell products like software, equipment, and communications systems to businesses rather than weekend-warrior gadgets to consumers (after B2B and B2C, call this M2B, or military to business).

Recently the first Milcom venture filed to go public: Triton Network Systems, which sells broadband fixed wireless technology to local phone companies and ISPs. Triton's broadband system started as a military project at Lockheed Martin (Apache helicopters use a battle-ready version). For its part, Lockheed Martin now owns about 8% of Triton, worth $45 million if the stock goes public at its mid-filing range.

Three other Milcom companies also use Lockheed Martin technology, including TeraNex, which converts audio and video data so that they can be fed securely through other companies' networks. In addition, Milcom works with ITT and even Russian scientists who once developed military technology for the other side: It partnered with a St. Petersburg company called EC-Leasing to develop a kind of "translation" software that allows old operating systems and applications to run on new computers. "We're not building kooky applications," says Milcom CFO Matt Bigge. "We're building products that solve critical business needs."

While the Milcom strategy sounds good on paper, it's still largely untested. Triton's IPO registration cites only one quarter's sales, totaling just $3.5 million. Even Milcom's partners are cautiously optimistic. "This is still an embryonic process," says Tom Radovich, director of adjacent markets for Lockheed Martin Missile and Fire Control in Orlando. A couple of potential problems still have to be solved, like making sure the defense contractors don't lose all their best engineers to Milcom's fledgling startups.

But if the model works out, maybe M2C won't be far behind. Hey, who wouldn't want to commute to work in an Apache helicopter?