Home' Trinidad and Tobago Guardian : June 27th 2013 Contents B17
Thursday, June 27, 2013 www.guardian.co.tt Guardian
Many were shocked to learn about the
size and scope of the US intelligence com-
munity s telephone and Internet surveil-
But investors may also be surprised to
learn that same "intel" community operates
a formidable venture-capital arm that aims
to give the CIA and other spy agencies first
dibs on the hottest gadgets and software.
Founded in 1999 as a way for the US to
keep up with the rapid innovation in science
and technology, In-Q-Tel has been an early
backer of start-ups later acquired by Google,
Oracle (ORCL), IBM and Lockheed Martin
"If you want to keep up with Silicon Val-
ley, you need to become part of Silicon
Valley. The best way to do that is have a
budget because when you have a cheque
book, everyone comes to you," said Jim
Rickards, an adviser to the US intelligence
community who is familiar with the activities
of Arlington, Va-based IQT.
Given the increasing importance of cyber
security and big data, it is a safe bet that
the US intelligence community will continue
to lean on private-sector development in
its behind-the-scenes fight against terrorism
and other geopolitical threats.
"I think it s a very prudent way to help
ensure that the United States stays secure.
You have to stay on the edge of development
because the rest of the world isn t standing
still either," said David Weild, former vice
chairman at Nasdaq OMX Group (NDAQ).
But like many forms of early investment,
backing from spies can come with some
significant strings attached and it s not clear
how the fallout of the recent surveillance
disclosures may impact future ties between
Silicon Valley and organisations like the
National Security Agency.
IQT was officially chartered in February
1999 by a group of private citizens at the
behest of then-CIA director George Tenet
and with the support of Congress.
The firm was envisioned as a way to
"bridge the gap between the technology
needs of the US intelligence community
and new advances in commercial technol-
ogy," according to IQT s website.
In a nod to its spy gadget origins, In-Q-
Tel is said to be named in part after Agent
Q, the fictional MI6 agent responsible for
providing James Bond with all the latest
While the CIA is credited with scores of
meaningful inventions, including the U-2
spy plane and the Corona reconnaissance satellite
programme, the private sector began to take the lead
at the end of last century ahead of the dotcom boom.
"By the 80s and definitely by the early 1990s, as
hard as they worked, it became clear the coolest stuff
was coming out of private companies in Silicon Valley,"
said Rickards, who is a consultant on market intel-
ligence at Omnis.
While IQT originally catered largely to the needs
of the CIA, today the firm supports many of the 17
agencies within the US intelligence community,
including the National Geospatial-Intelligence Agency
(NGA), the Defense Intelligence Agency (DIA) and
the Department of Homeland Security Science and
IQT doesn t release detailed data on its investments,
but it s clear the firm has a significant amount of
cash to deploy as it searches for the latest spy gear.
According to IRS filings, IQT received $63.94
million in grants and contributions in 2011, up from
$56.46 million in 2010, $56.42 million in 2009 and
$50.43 million in 2008. IQT also received $4.74 million
in investment income in the fiscal year ending March
The IRS filings also show that IQT listed total
assets of $218.66 million as of March 2012.
It s not clear how many people work at IQT, but
the firm listed salaries of $22.07 million in the 12
months ending March 2012 and its employees include
former intelligence officials and Wall Street executives.
IQT is led by former Intel (INTC) exec Christopher
Darby, who received about $1.96 million in total com-
pensation in the last fiscal year.
IQT declined to comment or authorise an executive
to speak on the record for this story. The CIA also
declined to comment.
Unlike traditional venture-capital firms like Accel
Partners that focus heavily on making a meaningful
return on investment, not-for-profit IQT has far
more of a strategic aim not unlike the corporate ven-
ture capital arms of Intel and Google.
"Clearly their point is not to necessarily make a
profit but to find strategic investments that support
their mother organisation," said Mark Cannice, a
professor at the University of San Francisco.
In many cases, IQT recruits other top-tier venture
capital or hedge funds to co-invest in start-ups. IQT
says that for every dollar it invests in a company, the
venture community has invested more than $9. The
firm also said it has leveraged more than $3.9 billion
in private-sector funds.
Over the years IQT has invested in more than 180
portfolio companies, including a slew of tech start-
ups that have been acquired by household Silicon
For example, in October 2004 Google acquired
Keyhole, an IQT-backed company that provided a
3-D visualisation of mapping data technology and
later became the basis of Google Earth.
IQT lists 98 companies in its current portfolio,
everything from intelligent cloud management soft-
ware maker Adaptive Computing to global climate
intelligence company Weather Analytics.
For early-stage entrepreneurs, the prospect of
receiving funding from IQT and the likelihood of
locking up a massive customer---the world s most
powerful intelligence agencies---can certainly be entic-
ing. But like most forms of investment, there may
be some caveats that go along with this strategic
support from IQT.
For starters, IQT may require the start-ups to agree
to provide their products and services exclusively to
the intelligence community for a period of time. IQT
could also flex its muscle to push early-stage com-
panies in a direction that caters more to the govern-
ment s needs.
"All professional money comes with restrictions
and stipulations and it s negotiated," said Wield, cur-
rently CEO of Wield & Co. "You may have to modify
your vision a little bit."
Still, it seems the benefits of working so closely
with the intelligence community would far outweigh
these concessions. (Fox)
Many were shocked to learn about the size and scope of the US intelligence community's
telephone and Internet surveillance activities.
CIA's venture capital arm goes after hottest gadgets
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