In-Q-Tel VC Gets Vote Of Confidence

After being selected by the CIA to conduct a Congressionally mandated independent cost versus benefit analysis of the Agency’s In-Q-Tel strategic venture capital/technology accelerator program, a 30-person panel from Business Executives for National Security (BENS) last week released its findings.

Most significantly, the group recommended that the In-Q-Tel program, which receives approximately $30 million per year, be maintained. Moreover, it argued that much of the criticism of the program which has come from both outside and within the CIA is mainly due to clogged lines of communication and the fact that many people do not recognize that a venture-type outfit needs more than two years to evolve and mature.

“The In-Q-Tel business model makes sense and its progress to date is impressive for a two-year-old venture,” the report said. “In-Q-Tel’s potential advantage to the CIA outweighs the risk. In-Q-Tel should continue as the CIA’s entrepreneurial and innovative venture facilitating the delivery of new technology to the CIA.”

It is important to note, however, that BENS did not recommend expanding In-Q-Tel’s client base beyond the CIA until it has better mastered its initial charge.

Of the $62.7 million allocated to In-Q-Tel by the CIA through March 31, 2001, the pseudo-fund has spent just over $51 million, including $30.1 million in mission delivery (i.e. programs, pilots, etc.), $2.5 million in start-up costs and $10.1 million in recurring administrative costs. Although the report did not identify any specific portfolio companies, it did cite an the successful prototype of an IT platform called the Presidential Information Dissemination System (PIDS) which was used to brief President-Elect Bush during the transition period.

BENS recommended that an additional review be conducted once In-Q-Tel’s original charter expires in 2004.