All the moves of the financial arm of the CIA (In-Q-Tel) in Europe
In-Q-Tel has scaled the French start-up Prophesee. Who is and how the US venture capital fund linked to the CIA is also moving in Europe to contain Chinese investments in artificial intelligence. The in-depth study by Giuseppe Gagliano
In-Q-Tel reportedly scaled French start-up Prophesee, says newspaper Les Echos , which would represent a first in France for the CIA's financial arm . An example that illustrates how this venture capital fund is becoming increasingly active outside the United States, and particularly in Europe, to counter China.
A little CIA money in the French start-up ecosystem? The French company in question, Prophesee , produces artificial retinas with artificial intelligence capable of "perceiving things that a traditional camera cannot". This Parisian start-up, founded in 2014 and which has collaborated with giants such as Chinese Huawei and Japanese Sony, would be In-Q-Tel's first known investment in France. The investment would have been made a few years ago, the French daily suggests, but it was never made public by Prophesee, nor by the CIA fund. Even today the two sides refuse to confirm the reality of the investment.
It would not be the first time that In-Q-Tel has secretly invested in a start-up. In 2016, Chris Darby, the chief executive of the American fund, admitted that out of a total of more than 310 investments since 2001, there were about a hundred that had never been made public, recalls the Wall Street Journal .
But the CIA investment fund's interest in French companies is well known. In 2020, the French army even had to call its own investment fund – Definvest – to the rescue to prevent In-Q-Tel from entering the capital of Preligens , a specialist in the analysis of geolocation data for intelligence. and the defense sector, Le Figaro told at the time.
France is not the only European country targeted by the US venture capital fund. The latter entered the capital of Spanish, British, Finnish and even German start-ups. The American fund then bet on Iceye, a Finnish company specializing in the construction of microsatellites, on CounterCraft, a Spanish company specializing in cybersecurity, or on Toposens, a German manufacturer of 3D sound sensors.
In all, In-Q-Tel has officially acquired stakes in fifteen European start-ups. And this without counting the investments kept secret. Historically, in fact, In-Q-Tel was founded both to exploit the innovations conceived in Silicon Valley, and to finance American start-ups in sectors that the CIA considered critical for the United States, says John T. Reinert, American lawyer author of one of the rare studies dedicated to In-Q-Tel's investment strategy published in 2013.
In the late 1990s, the CIA was faced with a double dilemma: its budget had been severely reduced since the end of the Cold War, and the agency saw Silicon Valley become a global innovation mecca, without being able to benefit from it. Hence the idea of creating an investment fund in 1999 on the model of those who financially supported the beginnings of all these trendy start-ups in California. With one difference: In-Q-Tel does not have to make a profit and operates 100% with public money.
To give young entrepreneurs confidence, the CIA has appointed Gilman Louie, a businessman who has nothing to do with espionage, as the head of In-Q-Tel. Its main achievement was to import a Soviet video game called… Tetris into the United States.
In-Q-Tel was immediately seen as a very promising tool by the US administration. As early as June 2001, a report by the independent organization Business Executives for National Security – which brings together business leaders responsible for reflecting on national security issues – concluded that this investment fund "allowed the CIA to rapidly identify emerging technologies that they could have an impact on your business ".
But success is controversial. In-Q-Tel is best known to the general public in the United States for being one of the first investors in Palantir, the Big Data Big Brother famous for providing electronic surveillance tools to law enforcement.
Chris Darby , who took over as CEO of In-Q-Tel in 2006, has repeatedly defended the investment fund's action, arguing that his partnership with start-ups had saved lives. For example, he had explained how the work of an American company specialized in the analysis of chemical residues present in carpets and supported by In-Q-Tel had allowed the army to equip devices capable of detecting the presence of dangerous chemicals in Afghanistan or Iraq. This financial structure doesn't just give the CIA the benefit of Silicon Valley's creative windfall. Heading a budget of just over $ 100 million a year, she also seeks to emerge champion in strategic areas in the eyes of American spies.
This is how the first investments concerned start-ups operating in the field of satellites, remembers the lawyer John T. Reinert in his study on In-Q-Tel. They then turned to data analysis and storage, as well as artificial intelligence.
Today, "the big problems are quantum computing, 5G communication infrastructure, microprocessors and especially biotechnology," Chris Darby told Congress in 2020.
A priority list identical to that of the Chinese. And it's not a danger. "The competition between the great powers for who will extend their influence in the world depends on a country's ability to be technologically dominant," said Chris Darby. Hence the idea of In-Q-Tel to start investing also outside the American borders, where China was already increasing the number of start-up acquisitions. The opening of the investment fund's first branch in London was decided in 2018, just as former US President Donald Trump launched his trade war against Beijing.
A year later, another branch was opened in Australia, a country at the center of the US-China struggle for influence in the Pacific. "This strategy is a way to counter the Chinese threat in high technology," says Les Echos . In-Q-Tel would feel invested with a mission: to offer an American alternative, in the face of Chinese windfall, to European or Australian start-ups.
The case of the French start-up Prophesee illustrates this investment battle perfectly. The Chinese are in fact also interested in this company, since the Sinovation fund and the Chinese smartphone manufacturer Xiaomi took a stake in July 2021.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/in-q-tel-cia-europa/ on Tue, 26 Oct 2021 05:59:26 +0000.