The spy who invested in my start up

The spy who invested in my start up: technology and national security

We often delve into the questionable side of big tech, primarily how West Coast tech giants toy with our privacy. The reality, however, is that technological innovation and startups have produced a net positive on society, impacting billions across the globe. Aside from the image Silicon Valley likes to present, game changing tech did not appear out of nowhere. Current technology builds on preceding innovations, much of it created in service of national security.

R&D in the security space previously created the technology to drive innovation. Born of necessity, hefty military budgets, and unlimited manpower, modern militaries had to innovate to win, as with the race to create an atomic weapon during World War II. Armies like the IDF have leveraged a lack of resources and abundance of human capital with tech to fight for its survival. Many formerly closed and opaque security institutions are opening up, embracing civilian technologies to tap into a civilian renaissance of global innovation. Venture capital is the main driver of new tech innovation, so Interfor will look further into the latest trends when spies decide to invest.

Maybe Al Gore did invent the Internet

Silicon Valley is not comfortable with the reality that the American military played a big role in forwarding innovation. DARPA and the Internet are government initiatives that have driven innovation the past fifty years, and US government money in the 1960s helped Stanford dominate engineering and tech. There is some truth to Al Gore’s claim that he invented the Internet – he helped pass legislation in Congress to fund ARPANET, the Internet’s predecessor. Silicon Valley’s elite believe the Stone Age existed before their companies, but in fact they built on years of previous R&D experience.

In Israel a technological ecosystem has been created in which academia, the military, and private industry cooperate, creating and innovating startup ideas. It is a fine line, though. As example: alumni of 8200, Israel’s version of the NSA, are in reserve duty as civilians; much of what they learn during military duty builds their startups. However, the realization is that the IDF and security organizations could be eclipsed in fostering innovation by well-capitalized startups.


Founded twenty years ago, In-Q-Tel is the CIA’s venture arm. Its website states: “IQT invests in commercially-focused, venture capital-backed startups to identify and adapt “ready-soon” technology – off-the-shelf products that can be modified, tested, and delivered for use within 6 to 36 months. This ready-soon focus means IQT finds and delivers critical, innovative technology quickly and cost effectively.” Financial returns are secondary, as the fund’s “LP’ is the government, so they can tap a vastly larger pool of investment capital. The irony is that In-Q-Tel doesn’t invest a significant amount (usually $500,000 to $2 million), but this capital serves as validation for civilian VCs who pump much larger amounts into IQT’s portfolio companies. Key here is the technology the CIA has access to.

George Tenet, former head of the CIA, sums up the reasoning behind In-Q-Tel: “We [the CIA] 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.”


While much of Europe lags when it comes to the development of game-changing startups there are bright spots such as London and Berlin. The UK is the home to legendary intelligence organizations who understand the importance of creating investment initiatives in order to tap into local civilian talent While the United States and Israel are the leaders in Cyber Security, Britain’s GCHQ launched it’s Cyber Accelerator with the goal of investing in exceptional Cyber Security startups and narrowing that gap.

As this TechCrunch article highlights, “the government said the aim of the fund was to widen procurement for security technologies via investing in Cyber Security and defense startups. It has been said to be “loosely inspired” by In-Q-Tel.” While it is the intelligence agencies’ job to know which way the wind is blowing this initiative is the tip of the spear in the British government’s near £2 billion investment in the National Cyber Security Strategy.

Shin Bet/Mossad

Possibly the most secretive security organizations in the world, Shin Bet (Israel’s version of the FBI) and Mossad (like the CIA) launched early stage accelerator initiatives to tap the best civilian technology to protect Israel’s citizens. Part PR stunt, part casting call for top tech talent, Shin Bet (called the “Shabak” in Israel) drew over half a million people to the intelligence organization’s challenge. Shin Bet also operates with Tel Aviv University Ventures’ Xcelerator, an early stage accelerator focused, as this NoCamel article states, on “AI, primarily natural-language processing (NLP) technologies, robotics, and data science.”

Mossad was even more secretive with the launch of its VC, Libertad Ventures. Its opaque nature has allowed it to operate anywhere in the world it chooses. The challenge will come with sourcing dealflow and the best companies – entrepreneurs need to know about the program to apply. The VC is so secretive that the CEO’s name is not public. The fund’s CEO stated this in a Times of Israel article: “We made several strategic and high-quality investments and have already seen the benefits they bring to the Mossad. We now call on additional companies and entrepreneurs to approach us. We will be happy to work with the right entrepreneurs.”

New York is a major tech hub, particularly with the Cyber NYC initiative. We’ll see more businesses develop into tech companies. As such, the line between civilian and security will continue to be blurred in tech and investment spaces, and we’ll see more innovations funded to protect us.