Another VC Group For FedsAnother VC Group For Feds

Washington is testing venture capital again as a way to speed development of emerging technologies for the intelligence community and the military. The CIA has a VC arm and the Army is planning one. Now, the Pentagon's National Imagery and Mapping Agency is heading in that direction, signing a five-year deal valued at up to $200 million with two research companies, SRI International and its subsidiary, Sarnoff Corp.

The two have formed Rosettex Technology and Ventures Group, in Rosslyn, Va., to concentrate on three areas: digital processing, analysis, and management; digital-technology infrastructure; and imagery and geographic information systems.

Rosettex will work with 64 partners, from IT consulting firms to university labs and defense contractors. It will dole out the government millions to the partners, and has set up a separate 10-year, $50 million VC fund. The government plans to buy products based on the technologies the partners generate.

Budget planners working on three-year buying cycles would have a better idea of which technologies to plan for by becoming familiar with the VC investments, says Mark Lister, Rosettex's managing director. "If we can come up with a better algorithm for compression video that could become a commercial product," Lister says, "the government could buy it off the shelf and use it."