US Defense Signals Silicon Valley's Cyberwar Help
As more conflicts shift from land to cyberspace, the nation's defense agencies are relying less on missiles and tanks and more on Silicon Valley technology entrepreneurs and startups to secure the country's porous Internet battlefield.
In one of the most overt displays of the federal government's growing dependence on Silicon Valley, the Department of Defense late last month announced it will start providing venture capital funding to valley startups that can help the Pentagon develop more advanced cybersecurity and intelligence systems to fend off nation states and hackers targeting everything from top-secret military correspondence to public power grids.
The Pentagon's program marks the first sustained investing in tech startups by a federal agency outside the nation's intelligence complex. The investments will be made through In-Q-Tel, a nonprofit strategic investing firm the Central Intelligence Agency created 16 years ago, and which has backed valley companies such as Keyhole, which helped create Google Earth. It means more government money will flow into the valley, though the Defense Department will not disclose the amount, and startups with bleeding-edge technology will strike deals with one of the biggest customers out there -- the federal government.
Silicon Valley tech firms are building microsatellites and drones, pioneering big data and biotechnology, and exploring 3D printing and robotics, technologies the military says it wants, with speed unseen in Washington and at a fraction of the cost. This isn't the Defense Department's first push into Silicon Valley. During the 1960s and '70s, the valley was dominated by aerospace and military contractors such as Lockheed Missiles, which put up factories across the Peninsula, and FMC, which built and tested military combat vehicles in San Jose.
But this new effort focuses more on software and less on hardware. Also as part of the program, the Pentagon will open its first office in Silicon Valley, an outpost in Moffett Field staffed with active-duty military and civilians who are charged with "scouting emerging and breakthrough technologies and building direct relationships to DOD," a senior defense official said.
The Department of Homeland Security is also opening an office in the valley "to strengthen critical relationships" with the tech sector, the agency's head said last month.
But the new defense push comes amid lingering animosity stoked by the Edward Snowden revelations, which showed the National Security Agency -- an arm of the Department of Defense -- broke into the communication links that connect to Yahoo and Google data centers around the world to collect information from user accounts, and intercepted networking products developed by Cisco for export overseas and secretly put in place data-tracking technologies.
Against that backdrop, some entrepreneurs might be looking at a partnership with the Pentagon and wondering, "How might this come back to bite me?" said Bob Ackerman, founder of Allegis Capital and a cybersecurity expert.
Skeptics aside, many VCs and technology experts say the Pentagon's new program will give more opportunities to entrepreneurs building technology for data gathering and cyberdefence but struggling to get funding because they don't have the consumer appeal of companies such as Uber.
