Making good on its promise to invest in innovative startups that will help it one day sell more than just hardware, Samsung this week disclosed an investment in Cloudant, which provides cloud-based mobile services. The investment is an interesting one for Samsung, but even more interesting for throwing light on Cloudant’s other investors. Which include, as it turns out, In-Q-Tel, the CIA’s venture capital fund, headquartered on the 11th floor of a nondescript office building in Arlington, Virginia.
Lest you start panicking over Cloudant’s nefarious intentions, take a look at its impeccable–and relatively innocuous–startup pedigree: the company was part of the 2008 class of Y Combinator, perhaps America’s most established startup incubator; it raised money from more traditional VC firms such as Avalon ventures; and its business is cloud-based database hosting and management—in other words, it’s a behind-the-scenes workhorse for web applications that rely on huge sets of data, which describes just about anything a software company might be minded to build these days.
What Cloudant’s nature says about In-Q-Tel is a bit more telling.
Launched in 1999, In-Q-Tel is in the business of discovering, investing in, and ultimately harnessing technologies that might benefit the American intelligence community. As George Tenet, who headed the CIA between 1997 and 2004, put it:
“We decided to use our limited dollars to leverage technology developed elsewhere. In 1999 we chartered … In-Q-Tel. … While we pay the bills, In-Q-Tel is independent of CIA. CIA identifies pressing problems, and In-Q-Tel provides the technology to address them. The In-Q-Tel alliance has put the Agency back at the leading edge of technology … This … collaboration … enabled CIA to take advantage of the technology that Las Vegas uses to identify corrupt card players and apply it to link analysis for terrorists, and to adapt the technology that online booksellers use and convert it to scour millions of pages of documents looking for unexpected results.”
In-Q-Tel isn’t in the investment game to make a fast buck, but the cutting-edge nature of its investments (which ranged from $500,000 to $2 million per company by 2005) means its ventures sometimes pay off. In 2004, the fund invested in a a satellite mapping software startup called Keyhole. One year later, after Google had bought Keyhole and turned it into Google Earth, In-Q-Tel sold some Google shares—which it had presumably received for Keyhole—for about $2.2 million (though it’s unclear how much In-Q-Tel initially invested in Keyhole, or whether those were all the Google shares it held).
Here is a list of In-Q-Tel’s other portfolio holdings. The companies provide services ranging from hi-tech language learning, to printing minuscule solar energy arrayas onto any surface, to cybercrime prevention, to “see-through-walls” microwave imaging.
All in all, it’s the kind of stuff one would expect the CIA to be interested in. Depending on where you stand, it’s either terrifying or reassuring to see the American intelligence community keeping its toe in the world of tech entrepreneurship.