The Largest Corporation’s Venture Wing –

Gilman Louie does not run the largest strategic venture program. He may run the venture wing for the country’s largest corporation, but that’s top secret information.

Louie runs In-Q-Tel, the Central Intelligence Agency’s venture capital operation (VCJ, April 2001, p. 49). Unlike many corporate VCs, In-Q-Tel is still keeping busy these days.

“The government needed a mechanism to engage companies that would historically never work with the government,” Louie says. The government already works with many large contractors, but Louie’s lightweight operation targets the start-up community.

In-Q-Tel has invested $65 million in 20 companies and the resulting technology development and transfer. About half of those companies have products ready for use in the government, consumer and business markets.

“We don’t discuss specifically the actual applications,” he says.

At the annual budget review meetings, Louie justifies the continuation of the program by its ability to create new capabilities quickly and cheaply, the volume of new technologies he gets to review, the speed of integration on done deals and the efficiency with which In-Q-Tel deploys capital.

“If you can get strategic alignment with $2 million rather than $10 million, then that’s good,” he said, “because you can put your other $8 million to work somewhere else.”

Other government agencies are watching In-Q-Tel’s success with intertest.

“There’s no telling if and how [the Army Science Board] would approach [VC], but they are interested in following what is going on,” Army Spokeswoman Karen Baker said.

Since Sept. 11, Louie says the sense of urgency has changed. His portfolio companies have pushed their beta-releases up six months, and In-Q-Tel’s referral rates from outside corporations have increased two or three times.

“Companies want to do more than hang a flag and give blood,” Louie said.