Stanford Seminar - Silicon Valley & The U.S. Government: In-Q-Tel’s George Hoyem

11 Jul 2024 (4 months ago)

In-Q-Tel Overview

In-Q-Tel (In-Q-Tel or IQT) is a not-for-profit venture capital firm that accelerates the development and delivery of cutting-edge technology to the U.S. Intelligence Community (IC) and U.S. Government (USG).
In-Q-Tel was created by the CIA 20 years ago to source innovation from the startup community and guide those technologies to address problems of national intelligence.
In-Q-Tel invests in five key areas: cybersecurity, AI enablement, data analytics, autonomy, and human performance.
In-Q-Tel has a deep technical bench of 40 subject matter experts, a program management team, a systems engineering team, and lawyers and accountants.
The total number of employees at In-Q-Tel is approximately 180 people.

In-Q-Tel starts with equity investments to get involved early, influence product development, and shape the product for their partner base.
They also engage in adaptation projects, which are more complicated and can involve multiple agencies.
In-Q-Tel typically makes 75 investments per year, with 30 equity-only investments and 30 adaptation projects in the United States, and 10 to 15 international deals outside the US.
In-Q-Tel takes a board seat in every deal to have a deeper understanding of the company and influence outcomes.
In-Q-Tel believes that dual-use companies, which have commercial success and can be adapted for government use, offer the primary focus and opportunity for investment, rather than defense-first companies.

The best deals often involve founders who are open to pivoting and listening to market signals, while the worst deals result from arrogance or a failure to adapt to market trends.
Successful dual-use founders are open to working with the government, willing to make long-term investments, and understand the unique characteristics of the defense market.
In-Q-Tel measures success through quantitative and qualitative criteria, with a focus on pilots, adoptions, and mission impact.
In-Q-Tel's return on investment is in the top quartile or decile, due to the signal they receive from their partners and their focus on helping them succeed.

In-Q-Tel's expertise lies in understanding how to navigate the opaque government market, particularly within the 17 intelligence communities inside the Department of Defense and the CIA.
In-Q-Tel provides startups with insights into these agencies and is a valuable resource for startups looking to work with the US government and intelligence communities.
The CIA's venture capital (VC) model provides them with insights and strategic partnerships that traditional grant funding cannot.
The VC model allows the CIA to be a strategic partner and shape technology development, rather than simply buying and selling products.
The CIA coaches companies in its portfolio on protecting their intellectual property and markets from foreign intelligence services and foreign ownership, control, and influence (FOCI).

Anderol, an integrator company, was supported by In-Q-Tel from its seed round and through several adaptation projects.
GitLab, a code repository management company, was introduced to the government by In-Q-Tel and helped adapt its product for government use, leading to significant growth and market dominance.