CIA-funded venture firm seeks high-tech aid for US spies

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Arlington: From a nondescript office building overlooking the Potomac River, In-Q-Tel Inc. invests millions of dollars in some of the world’s most advanced high-technology companies.

But this venture capital firm isn’t typical in any way. For starters, it’s a nonprofit. It invests only in tech companies whose products are geared toward national security. But what’s most unusual about In-Q-Tel is where it gets its funding and its direction: from the Central Intelligence Agency.

In-Q-Tel is the CIA’s venture capital arm and the intelligence community’s eyes and ears on the private-sector technology world.

Created five years ago at the height of the tech boom, the VC firm’s goal is not to make money, but to find high-tech products that can someday be used for security or spying.

Of course the CIA has its own research and development operations. And when it needs to, it can simply acquire technology it wants.

But “the idea was that the CIA needed access to all that technology being built in garages in Silicon Valley, in universities, in national labs ... that (it) just couldn’t see otherwise,” said Gayle von Eckartsberg, In-Q-Tel’s vice president for strategy and communications. “They needed a mechanism for doing that.”

So with the help of some high-profile heavyweights, including former Defense Secretary William Perry, former Lockheed Martin Corp. Chairman Norman Augustine and former Xerox Corp. Chief Scientist John Seely Brown, the CIA created In-Q-Tel.

Since then, the firm has used its annual stipend of about $35 million from the CIA to invest in about 40 companies across the nation and in Canada.

The unusual idea is gaining interest in other government agencies, most notably the Defense Department.

“I can’t think of anything that’s like In-Q-Tel today,” said Mark Heesen, president of the National Venture Capital Association. “But the thinking is that the In-Q-Tel model is going to be replicated by other agencies throughout the federal government.”

In-Q-Tel is small compared with the average $145 million invested each year at traditional VC firms, according to figures from Heesen’s group. And its typical investment of $1 million to $3 million per company is small too.

But “our goal isn’t to invest for the sake of investing,” said Kimberly Cook, In-Q-Tel’s director of technology assessment.

“It could be the greatest technology since sliced bread, and we could know going in that this is going to be the next Microsoft,” Cook said. “But if there’s no value in something for the intelligence community, we wouldn’t invest in it.”