NASA launches VC fund in Silicon Valley

First, the CIA launched a venture capital arm in 1999. In-Q-Tel, as it was called, nestled its offices quietly amid Silicon Valley’s top-tier venture firms on Sand Hill Road, and has started making money, as we reported here. Impressed with the results, the Army started a fund, and other branches started considering similar efforts.

So it’s no surprise that NASA has jumped in the game. More details about the fund, which will begin to invest during the first quarter of 2005, came from VentureWire today, which unfortunately requires a subscription. The goal is to develop technologies that will help with its missions to the moon and Mars. Congress has given it $10 million to start off with, according to one of the fund’s partners, Patrick Ciganer, and budgeted $25 million over five years.

It will be called The Mercury Fund, and will be constructed along the lines of In-Q-Tel. Indeed, NASA has selected the same law firm that helped put In-Q-Tel together. It will reside in Mountain View, and will begin to look for several more “investment professionals.” Owen Barwell is a second partner.

Like In-Q-Tel, NASA aims to partner with other VC firms. Its own investments will be small at first, limited to three investments of about $1 million each, according to VentureWire. Talk to entrepreneurs and venture capitalists in Silicon Valley, and they’ll tell you they’re fascinated with space. Google’s co-founder Sergey Brin, for example, talks passionately about his time at the NASA space center in Huntsville, Alabama, and he and co-founder Larry Page talked about launching their own space project. Interest in technology seems to go hand-in-hand with dreaming about space. As NASA looks for venture capital firms to invest alongside with, it’ll likely find lots of interest.

Apparently, this isn’t the first venture effort by NASA.

According to VentureWire, NASA is interested in such areas as nanotechnology, robotics and machine intelligence, high speed networking and communication and biotechnology. “In the nanotech field, NASA hopes that investments will eventually lower the cost of launching a rocket – currently about $10,000 a pound, Ciganer said – by facilitating the development of lower-weight products.”

UPDATE: I’ll be talking tomorrow with NASA’s venture partner, Patrick Ciganer, so feel free to send me any questions you might have, and I’ll forward them on.

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