Transatlantic Cable : The CIA gets into Venture Capital

If you're setting up a company in Silicon Valley, there are people falling over themselves to lend you the money to do it. Despite tech stocks falling over the past few weeks, Venture Capital companies are practically getting into fistfights to be the one to fund the next Netscape or AOL. However, this hasn't stopped a surprising new entry into this already crowded field: the Central Intelligence Agency.

The CIA (for those of you who have been living on Mars for the last forty years) is the US government body that deals with the dirty business of spying on, destabilising and (if you believe their critics) shooting naughty people who don't believe in truth, justice and the American way. Over the past few years, spying has become an increasingly high-tech business, and the CIA has spent vast amounts of cash on staying ahead of the technology wave. However, they've now decided on a new tack - they are going to fund other people to do it in Silicon Valley.

In order to do this, they've set up a new company that will invest in start-up businesses that could produce technologies that could be useful to them. The aim of this company is to create "an innovative engine for the community to work together with individuals, industry and academia to explore new and unconventional approaches to common problems", according to CIA boss George Tenet.

The new company will be called In-Q-It (a pun on the MI6 techie who kept James Bond supplied with remote-controlled BMWs and exploding keyrings) and will be headed up by Gilman G. Louie, the former chief creative officer of toy company, Hasbro. He claims: "Although In-Q-It will work with CIA, it is not tied to the CIA's organisational style and structure... because In-Q-It is a private company, we will be able to work in Internet time, and structure ourselves in a manner that will be familiar to many of the information technology companies we hope to attract as partners."

The reaction of the VC community has been somewhat muted, with many analysts wondering why the CIA doesn't just spend the money on spying on someone instead.

It argues that there is already enough money available to make sure that no potential innovation goes to waste. One prominent VC analyst commented: "Say the CIA said that wrist phones are critical for our agents and we will buy 10,000 of them... as long as there is a consumer market for it, a bunch of entrepreneurs will go down to Sand Hill Road (where many VC companies have their offices) and seek financing to get it."

Interestingly, the CIA claims that the company is a "private, independent, non-profit corporation" - which means that it is probably about the only company in the Valley that doesn't want to make a profit. (Although there are plenty that are just failing to do it however hard they try...)

Ironically enough, the In-Q-It Web site doesn't seem to be up and running at the time of writing, but you can read the CIA press release (which sounds rather odd when you write it down) at http://www.cia.gov/cia/public_affairs/press_release/pr093099.htm

Speaking of spying: a section of the FBI is claiming that non-US programmers could be inserting harmful code into Y2K bug fixes. Michael Vatis, the director of the National Infrastructure Protection Center (NIPC, the section of the FBI that examines threats to computer networks) has recently been quoted as saying that there are "some indications that this is happening". This has raised concerns that foreign programmers who have been contracted to write Y2K fixes by US companies could be inserting backdoors or logic bombs into their code that could be triggered by a hostile government or other body.

Many US companies have contracted out their Y2K compliance work to companies outside of the US, and one CIA officer has warned that Israel and India are the two most likely sources of malicious code. He claims that they "appear to be the countries whose governments or industry may most likely use their access to implant malicious code", although he did warn that other countries could also be inserting similar nasty things. So it seems that January 1st, 2000 may not be the last we hear of the Millennium bug...