America's New Secret Weapons
By Paul Kaihla

(Business 2.0) – For technology entrepreneurs, the war on terror has become the new Y2K. Just as the millennium bug pumped $150 billion into information technology companies, the fight against al Qaeda has poured $135 billion into defense-related technology just since 9/11. Some of that cash is nurturing a new crop of startups building innovative intelligence tools, communications gear, and advanced weaponry.

Details about the new products are largely classified, but intelligence agencies say some of the young companies merit particular interest. One of them is Blackbird Technologies, founded by serial defense entrepreneur Peggy Styer in 1997. Among other things, the Herndon, Va., company specializes in signal-interception devices hidden in everyday objects as small as a pack of cigarettes. Since its first year of operations, Blackbird's revenues have increased 1,000-fold, to $300 million.

In Wayne, Pa., Rajant is cashing in with what it calls the Wireless BreadCrumb Network. The system consists of lunch-box-size base stations that soldiers can carry into battle; within minutes the hardware creates a self-configuring, secure broadband wireless network that can transmit data, voice, or video. Less than three years old, Rajant expects to turn its first profit this quarter.

A Quebec biotech named IatroQuest will bring its biohazard detection product to market next year. While current technology requires sending suspicious substances to a lab, IatroQuest's onsite system can screen in real time for agents ranging from E. coli to anthrax. It works by measuring the photo emissions created when a bio-agent binds with its antidote.

The most mind-boggling technology of all, however, is being developed by supersecret Ionatron, of Tucson, Ariz. Although the company refuses to discuss its business, the Pentagon is abuzz with news that it has successfully tested a Star Trek-like directed-energy weapon. The ray gun uses a laser-induced plasma charge to disable vehicles, communications devices, or even people. With powerful technologies like that on the horizon, the legacy of this spending boom is likely to be far more enduring than the frenzy over Y2K. -- PAUL KAIHLA