https://news.yahoo.com/in-silicon-valley-a-new-breed-of-investors-is-seeking-closer-ties-to-americas-military-and-spy-agencies-090041615.html

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A budding group of venture capital firms and investors are working with the CIA and other U.S. intelligence and military agencies in an attempt to help shape the future of Silicon Valley, ensuring companies produce innovations useful for national security while avoiding funding from potential adversaries like China.

Call it the new world of "spooky finance."

These firms — like New North Ventures, Harpoon, Scout Ventures, and Razor's Edge — are often themselves staffed by former U.S. intelligence and military officials, and sometimes work together to cofund national-security-related startups in areas such as artificial intelligence, cybersecurity, and next-generation communications.

The new world of "spooky finance" reveals an increasingly tight relationship between venture capital firms and U.S. spy and military agencies, which have long sought to tap into Silicon Valley’s technology base.

“What you’re seeing, and it’s basically been developing over time, is an ‘intelligence-industrial base,’” says Ronald Marks, a visiting professor at George Mason University and a former CIA officer.

“You had a military-industrial base before — now, you’ve got an intelligence-industrial base,” says Marks. “Why? Because, let’s face it: All the [intel stuff](https://www.dni.gov/index.php/newsroom/press-releases/press-releases-2021/item/2220-dni-releases-fy-2022-budget-request-figure-for-the-national-intelligence-program#:~:text=WASHINGTON%2C D.C. – The Director of,National Intelligence Program (NIP).) together now is, like, 86 billion dollars. It’s the third-largest part of the discretionary budget of the United States. That’s a lot of money; that’s a Fortune 100 company.”

Greater coordination between Silicon Valley and Washington’s national security bureaucracies is much needed, according to Heather Richman, founder of the Defense Investor Network, a Silicon Valley-based group that connects senior officials from the Pentagon and U.S. intelligence agencies with venture capital firms and startups doing work with national security applications.

The Defense Investor Network is focused on “educating investors to stop taking Chinese money and be more transparent about who their LPs [limited partners] are,” says Richman. “We’re trying to get to investors and the companies before this becomes an issue.”

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The big data analytics firm Palantir serves as a model for some in the "spooky finance" world. In-Q-Tel, the CIA’s own venture fund for emerging technologies, was an early investor in Palantir, a software firm founded in 2003 by Peter Thiel and Alex Karp. In-Q-Tel has to spy and military agencies and big business alike. Palantir went public in 2020 with an initial valuation of about $22 billion, although it continues to face scrutiny over its appraisal.

U.S. spy agencies have coveted new technologies for decades. But many intelligence officials now believe advances in technology are the practice of spying.

The push to give the U.S. a tech-generated espionage edge has become a key CIA priority under the directorship of Bill Burns. In October, Burns that the agency was creating a “Transnational and Technology Mission Center” to “address global issues critical to U.S. competitiveness — including new and emerging technologies, economic security, climate change, and global health.”

Burns’s announcement follows the standing up in 2020 of CIA Labs, an “in-house research and development arm” within CIA, designed to encourage agency employees to collaborate with academics and private sector researchers on emerging technologies.

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