In-Q-Tel backs CoreStreet

At the end of 2006, it might have been easy to write off In-Q-Tel, the investment arm of the Central Intelligence Agency. The investor saw turnover at the CEO position as Gilman Louie left in January 2006. His successor, Amit Yoran, was gone by May. Then, in July, Managing Partner Mark Frantz, who had been offered the position of interim CEO, left to join Redshift Ventures.But the firm has been an active investor lately. In the first quarter of 2008, In-Q-Tel has invested more than $20 million in five deals, including an undisclosed round last week to CoreStreet, a Cambridge, Mass.-based security company which makes locks and keys souped up with a slew of innovative technologies. And the organization has stablized its executive ranks as Christopher Darby has held the CEO post since September 2006.

The firm declined to comment on the CoreStreet funding, but In-Q-Tel typically invests between $1 million and $3 million in each deal.

In-Q-Tel has also backed visualization software maker Quantum4D with $200,000 in January, data analysis software maker Palantir Technologies with a $36.7 million round next to Reed Elsevier Ventures in February, imaging semiconductor company Pixim in a $5.1 million round in February and RF company Wispry with a $7 million round in March, according to Thomson Financial (publisher of PE Week).

Last year’s successful exits may have helped the firm gain its footing. It sold electronic discovery service Stratify to Iron Mountain in November 2007 for $158 million. The company had raised $40 million from In-Q-Tel and other investors since 1999, when it was named Purple Yogi.

In-Q-Tel also sold business intelligence software maker Spotfire to Tibco Software in May for $195 million. The company had raised $40 million since 1996.

The firm also offload some of its less successful investments last year. It sold facial recognition software maker A4Vision to Bioscrypt in January for shares worth $6.7 million. The company had raised $25 million since 2001. In-Q-Tel also sold the security assets of Network Chemistry to Aruba Networks in July for an undisclosed amount. The company had raised $6 million since its 2002 inception. —Alexander Haislip