Why VC Funding Belongs with the Department of Defense

The U.S. government’s engagement in venture capital funding through the CIA’s venture capital arm, In-Q-Tel, has raised significant legal, ethical, and operational concerns. Given these challenges, it is prudent to consider alternative agencies better suited to manage such investments. The Department of Defense (DoD) emerges as a more appropriate entity for handling venture capital activities aimed at fostering technological innovation for national security purposes. Here’s why:

  1. Mission Alignment and Scope:

    • The primary mission of the CIA is intelligence gathering and covert operations, which often intersect with sensitive areas of public international law, such as territorial sovereignty and the laws of war. In contrast, the DoD’s mission encompasses the broad spectrum of national defense, including the development and integration of advanced technologies to maintain military superiority.

    • The DoD has a well-established infrastructure for research and development (R&D) through agencies like the Defense Advanced Research Projects Agency (DARPA). This alignment with technological innovation makes the DoD a natural fit for venture capital activities aimed at enhancing national security capabilities.

  2. Minimizing Legal and Ethical Risks:

    • In-Q-Tel’s investments expose the CIA to a variety of private-sector legal disputes, including contract issues, patent rights, and securities laws. Such entanglements can lead to foreign relations issues and undermine the CIA’s primary mission.

    • The DoD, on the other hand, is already deeply involved in procurement and development contracts with private sector firms. It possesses extensive experience in navigating the legal and regulatory landscape associated with these activities, thereby minimizing additional risks.

  3. Operational Transparency and Accountability:

    • The CIA’s secretive nature and covert operations raise concerns about transparency and accountability in its venture capital investments. This secrecy can lead to mistrust and diplomatic issues, as seen with the controversy in Canada over In-Q-Tel’s investment in a medical records-tracking firm.

    • The DoD operates under more stringent oversight and accountability mechanisms through Congressional committees and public reporting. This transparency can help build trust and ensure that investments are aligned with national interests and ethical standards.

  4. Focus on Technological Superiority:

    • The DoD has a vested interest in maintaining technological superiority in defense systems. By managing venture capital funds, the DoD can directly support the development of cutting-edge technologies that enhance national security.

    • The DoD’s extensive network of research institutions, laboratories, and industry partnerships provides a robust ecosystem for fostering innovation. This network can effectively leverage venture capital investments to accelerate the development and deployment of critical technologies.

  5. Risk Management and Mitigation:

    • The inherent risks associated with venture capital investments, including the potential for failure and industrial espionage, are better managed within the DoD’s existing risk management frameworks. The DoD’s experience in handling classified and sensitive technologies further mitigates the risks of exposure to foreign entities.

    • By centralizing venture capital activities within the DoD, the government can ensure a more coordinated and strategic approach to innovation, reducing redundancy and improving the overall effectiveness of investments.


Transferring the responsibility of venture capital funding from the CIA to the DoD addresses several critical issues. It aligns the function with an agency whose mission, expertise, and operational framework are better suited to manage such activities. This strategic realignment enhances national security, reduces legal and ethical risks, and ensures greater transparency and accountability. The DoD’s existing infrastructure and focus on technological innovation make it the ideal entity to oversee venture capital investments that support the development of cutting-edge defense technologies.


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