“In-Q-Tel provides only limited information about its investments, and some of its trustees have ties to funded companies”
Wall Street Journal – 30 August 2016
There is no secret about the CIA — and other US Intelligence agencies — being involved in the early development stages of major projects such as Google Earth and Palantir Technologies through a venture-capital firm it created: IN-Q-Tel .
However, according to an analysis of the Wall Street Journal, IN-Q-Tel operates “in the shadow”.
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IN-Q-Tel has extremely close ties to the CIA and runs almost all investment decisions by the spy agency. The firm discloses little about how it picks companies to invest in, never says how much, and sometimes doesn’t reveal the investments at all.
The analysis mostly focuses on the potential conflicts of interest the arrangement between the CIA, In-Q-Tel and the companies entails and reach the conclusion that it may not be legal but it is necessary.
Ronald Gilson, a Columbia Law School professor who has written about governance and venture capital, said In-Q-Tel’s unique semigovernmental model puts it in the situation of needing expert advice while trying to avoid overly cozy financial relationships.
“On the one hand, if you wanted really pristine independence, it means you are going to need people who don’t have commercial ties to the industry,” Mr. Gilson said. “On the other hand, if you have people without any commercial ties to the industry, they are not much use.”
Curiously, the WSJ does not address a question their readers care most about: should you invest in these 300+ companies? Or at least, in some of the 234 of them that are known? Let us take on example.
Palantir Technologies, Inc. is a private American software and services company, specializing in big data analysis. Founded in 2004, Palantir’s original clients were federal agencies of the United States Intelligence Community (USIC). In-Q-Tel funded the projet — right from the start — with $2 million.
In the news lately is a data analysis company called Palantir that is a good bet to go public sometime in 2017. If you want to buy Palantir stock you will have to be patient until the IPO because until then, it is a private company.
Palantir’s approximate $20 billion valuation puts it in near the top of high profile startups yet to IPO.
A Great Investment?
Obviously, the firm seems to do extremely well. But then again, things may not be as they seem.
A recent story from BuzzFeed attempts to raise doubt that Palantir is doing as well as some had thought.
Perhaps, you should not trust every news reported by BuzzFeed.
However, in this case, there seems to be some reasons for concern…
Citing interviews with former employees and confidential documents, the story says that the company is losing some big clients (Coke, Nasdaq, and Amex) as well as some key employees.
If true, this is something largely unknown up until now as Palantir is notoriously secretive in the information it releases.
Co-Founder Joe Lonsdale writes that the BuzzFeed piece cherry picks some of its facts and reports them out of context. He maintains that in any business, both good clients and good employees will be lost for a variety of reasons which is the case here.
As they say:
“Then you will know the truth, and the truth will set you free.”
The CIA’s Venture-Capital Firm, Like Its Sponsor, Operates in the Shadows — WSJ August 30 2016