"These are the AI companies that the CIA is investing in"

A very deep dive from Sherwood News, September 20:

You can’t spell CIA without AI

A brave anonymous source has leaked a top-secret list of AI companies that the CIA has been pouring millions of investment dollars into. Just kidding… it’s all publicly available on their website. 

In-Q-Tel is the non-secret, non-profit investment arm of the CIA, which was established in 1999. A 501(c)3, the firm is not officially part of the US government (though it is largely controlled by it), and has received over $1.2 billion from US taxpayers since 2011, which it has used to make over 750 investments. In-Q-Tel’s mission is to "Be the premier partner trusted to identify, evaluate, and leverage emerging commercial technologies for the US national security community and America’s allies.”

Rather than seeking financial reward for backing winning companies, In-Q-Tel’s investments are strategic — it surveys the marketplace for technologies and businesses that could solve problems for the US intelligence and national security community.

A most unusual venture capital firm
While it does not disclose all of its investments, a look through its publicly disclosed portfolio shows that In-Q-Tel made some smart, early bets. Some high-profile companies In-Q-Tel invested in include Keyhole, the satellite mapping app which GoogleGOOGL $174.60 (1.26%) later acquired and turned into Earth, and Palantir TechnologiesPLTR $77.50 (6.19%), the data analytics firm co-founded by Peter Thiel, currently valued at roughly $80 billion. The firm has since exited those positions.

In-Q-Tel is a huge player among venture capital firms investing in national security companies. The Silicon Valley Defense Group’s NATSEC100 index is a ranked list of the top-performing, venture-backed private companies working in the national security sector. This year’s list ranks In-Q-Tel as the number one venture capital firm in the space, having backed 35 companies on this year’s NATSEC100 list. 

In a 2020 interview, George Hoyem, Executive Vice President for investments at In-Q-Tel said the company makes 50-60 investments per year.

“95% of the companies we back have never done business with the federal government, so we’re taking commercial startups and showing them a dual use into the government,” said Hoyem.

Hoyem said the typical investments are in the $1-4 million dollar range, with smaller equity-only seed investments of around $1 million or less, while “work program” deals where the company’s technology can be developed and tested by partner defense and intelligence agencies see a larger investment. According to Hoyem, 70% of their investments make it to the pilot stage, and about half are adopted for actual agency use. 

Hoyem said that they look for new technologies that their national security and intelligence partners may not be aware of. “So we’ll go back to them and say, ‘Hey I know you’re looking at this problem this way, but there’s this new capability’ whether it be, you know, an accelerated GPU engine, or artificial intelligence being applied to a particular problem,” Hoyem said. 

Some of the companies that In-Q-Tel has invested in build technology that could have come straight out of the labs of “Q,” James Bond’s spy gadget wizard, which was an inspiration for the company’s name. The company has backed mouth radios, a Brooklyn hologram studio, and skin-care products that could be used to extract your DNA.

Unlike the CIA’s financials, which are classified, In-Q-Tel is a non-profit, which means we get a peek into how it invests its funds through its public tax returns. Looking back over the past decade or so, In-Q-Tel’s net assets grew substantially year-over-year.

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In 2011, In-Q-Tel reported around $100 million in net assets, growing to $930 million by the end of 2023. Even though it is a non-profit, In-Q-Tel still pulls in substantial revenue from investment returns in its portfolio, which it is free to use to re-invest in more companies.

In the past five years for which tax returns are available, the US government has granted In-Q-Tel around $100 million per year. While the company’s assets have grown, it is hardly self-sustaining and requires substantial cash infusions from US taxpayers to stay afloat. If you remove government grants from In-Q-Tel’s revenue numbers, after expenses they would have had a loss for the past 12 out of 13 years....

....MUCH MORE

Previously on In-Q-Tel:

We have a couple dozen posts on In-Q-Tel, most have some version of this homely little observation:
The CIA’s Venture-Capital Firm, Like Its Sponsor, Operates in the Shadows

This is a pretty good look at the spook shop vehicle.
As a side note, back in the early years of this century, especially immediately after the mass murders of 9/11, it was thought that investing alongside In-Q-Tel was the cool thing to do.
It took a while for the realization to sink in that they weren't necessarily in it for the money return to the VC's.

• Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)
• Paging M. Macron: "CIA’s Venture Capital Arm Is Funding Skin Care Products That Collect DNA"
• "The Biorevolution: Its Implications for U.S. National Security, Economic Competitiveness, and National Power"
• What's New In CIA Venture Capital: In-Q-Tel's IQT Quarterly Recap – Winter 2023