Venture capitalism for spy games

  @FortuneMagazine May 6, 2013: 8:28 AM ET
CIA20 in-q-tel

In a nondescript high-rise three miles outside Washington, D.C., a little-known firm called In-Q-Tel is investing U.S. tax dollars in startups that benefit the intelligence community. Since its founding in 1999, In-Q-Tel -- named after the gadget-toting James Bond character Q -- has backed 200 early-stage tech companies whose products range from a wireless-communication device that sits in an agent's mouth to software that protects PC screens from prying eyes.

Decades ago the federal government might have developed that kind of technology itself. But as the Internet boom in the late 1990s began monopolizing engineer talent and venture capital, Silicon Valley quickly outpaced the government as the country's nexus of innovation. To get its hands on the best new technology, the CIA created In-Q-Tel.

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