The Venture Capital Firms at the Nexus Between Silicon Valley and the Pentagon-Intelligence Complex

Nov. 6, 2021 (EIRNS)—National security-oriented venture capital firms have become the nexus between Silicon Valley startups on the one side and the Pentagon and the CIA on the other. According to a Nov. 4 article by Zach Dorfman, Yahoo News national security correspondent who is also with both the Aspen Institute’s Cyber and Technology program and the Carnegie Council for Ethics in International Affairs, a “budding group” of venture capital firms have made themselves the link between Silicon Valley firms that produce “innovations useful for national security” with an included aim of keeping Chinese money out of these firms. Dorfman calls this new world “spooky finance,” adding: “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.”

Ronald Marks, a visiting professor at George Mason University in Northern Virginia and a former CIA officer, calls this an “intelligence-industrial base,” not unlike the military-industrial base. “Why? Because, let’s face it: All the intel stuff together now is, like, $86 billion. It’s the third-largest part of the discretionary budget of the United States,” he says. “That’s a lot of money; that’s a Fortune 100 company.”

At the center of the nexus of Silicon Valley firms and the Pentagon is one Heather Richman, who runs something called the Defense Investor Network. Richman has worked for about 15 employers over the last 25 years, including Sen. Chuck Schumer from 1999 to 2004.

Dorfman also reports that 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.”

Richman claims that the Defense Investor Network has members in all of the Five Eyes countries and includes a former Australian prime minister, as well as behemoths from the Silicon Valley venture capital world.

Dorfman reports that the model for some in the “spooky finance” world is Palantir, the data analytics firm founded by Peter Thiel in 2003. Thiel, one of world’s richest men, is PayPal’s founder and has been involved in several venture capital firms. In-Q-Tel, the CIA’s venture fund for emerging technologies, was an early Palantir investor, says Dorfman. “Palantir is the 800-pound gorilla,” says Brett Davis, a partner at New North Ventures, a national security-focused venture capital fund, who spent 34 years in the CIA and special operations world. “That’s the company that opened everybody’s eyes” to the potential of dual-use-oriented startups.