7/27/2019 CIA. Adventures in Venture Capital Hill Experts Reviewing Agency's $28 Million In-Q-Tel Offshoot for Value

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. - . . -,zzarasuw4str-tte.$04.4,kwwzgadzko,q6 ia i . .a , . . -, , , , : o . . v . , 1,s,.[HE WASHINGTON POST3 0 .1ATIONAL NEWSC IA. Ad ventures in V enture C apital

H ill Exper ts Reviewing A gency 's $28 M ill ion In-Q -Tel Of fshoo t for ValueBy VERNON LOEBWash, Ingron, Pan Staff Writer

Three years after the CIA began pouringmillions of dollars into an unclassified venturecapital fund called In-Q-Tel, Congress has con-vened a panel of technical experts to deter-mine whether the initiative is worth the mowey in the face of emerging Internettechnologies.Their conclusions, due at the end of thismonth, could have broad implications for theUS. inte l ligence com mun ity , a col lect ion ofagencies tha t spend about $30 bi l lion a yearbut still find themselves struggling to keeppace with rapid advances in com puters andtelecommunications."All the early signs are very po sitive aboutIn-Q-Tel ," CIA spokesman Bil l Harlow sa idyesterday. 'There's a lot of interest within theagency about the technologies in whichthey're investing."

In-Q-Tel's 1998 creation marked a radicaldeparture for the top secret CIA precisely be-cause i t was not secre t . The fund, fue led by$28 million a year in federal subsidies, rentedoffice space in Rosalyn and P alo Alto, Calif. ,the heart of Silicon Valley, and went lookingfor commercial technologies.If anything, my biggest problem is keepingpeople away," Gilman L ouie, In-Q-Tel's presi-dent and c hief executive officer, said in a re-cent interview at the fund's modular, high-tech headquarters 29 f loors above the Poto-mac.To date, the nonprofit In-Q-Tel h as investedin 16 companies, from Mohomine Inc. , whichm a k es software for converting "unstructured"data on com puter hard drives into digital databases, to SafeWeb, whose 'Mangle Boy soft-ware wil l expand upon anonym ous Web surfing technology offered by the firm.

FILE MIRA,IVUIS %War FOP ni t WASHINGTON POSTIn-Q-Tel Chief Execut ive Off icer Gi lman Lou iesays his "biggest problem is keeping pe opleaw ay ." He has invested in l f i high- tech f i rms.

In typical unbureaucratic fashion, In-Q -Teldecided to invest $1 m illion in 'Mang le Boy'sdevelopment after one of its representativesstruck up a conversation with a SafeWeb exec-utive at a Silicon Valley bar.In-Q-Tel ' s proponents inside and o uts idethe intelligence com munity believe the fund'sreal power lies in its ability to link the bu-reaucra t ic, buttoned-up C IA with the entre-preneurial, free-flowing private sector.Louie h imself is a former com puter gameimpresario and toy com pany executive whorevels in his role as intelligence communityiconoclast Other In-Q-Tel executives havejoined the funds from companies such as Ama-zon.com, Panasonic, Disney and SpectrumHolobyte."Our mission is to go o ut and find the stuffthat has commercial application that also hasanalogies to what the agency is doing," saidLouie, a San Francisco native who splits histime between coasts.

With an investment fund wel l below $100would rank as only a sm al l

player in the venture capital market. But Louiesaid no other venture capital player can offerhigh- tech s tartups what i t can the abil i ty totest their technologies inside the CIA, one ofthe largest data repositories in the world.Louie called the fund a "venture catalyst'and said its role has evolved from identifyingpromising commercial technologies to help-ing the CIA apply them to the agency 's da tamanagement problems.Another distinct In-Q-Tel advantage, Louiesaid, is that its portfolio is not riddled with los-ers from the past year's high-tech marketshakeout "I can still do deals: Louie said. "1can be swifter than the venture funds."One of ln-Q-Tel's latest investments is insoftware developed by Systems Research &Development of Las Vegas to catch cardcounters at casinos by analyzing data about re-lationships and previous transactions. Thesoftware originally was designed to catch em -ployees who internally misuse computer net-works.In-Q-Tel has also invested in NetOwl, an ad-vanced search engine developed by SRA In-ternational Inc. of Fairfax that mines data u s-ing natural speech patterns instead of keywords.An artic le from the Defense In tel l igenceJournal posted recently on the CIA's W eb sitestates that the agency created ln-Q-Tel be-cause its technological ability to innovatethe ability that produced the U-2 and SR-71 re-connaissance aircraft in the 1950s and1960shad largely disappeared by the 1990s.-The agency 's leadership recognized tha tthe CIA did not , and could not , compete for[information technology] innovation and tal-ent with the same speed and agility that thosein the commercial marketplace, whose busi-nesses are driven by `Internet t ime' and p rofit ,could."