In-Q-Tel was a very smart answer to an old problem. The problem is that the CIA needs lots of cool gadgets, and these cost lots of money. One solution to this would be to have all the best scientists and inventors working for the CIA, but this is neither practical nor much of a money-saver. So the CIA went in another direction; they became venture capitalists.
The theory was that they could take their limited research budget and rather than trying to invent things themselves, they could loan it out to companies that were already working on these technologies. If they chose wisely, not only would they get cool gadgets, but they would also get a financial return on their investment.
It didn't work out quite that way. For legal reasons, In-Q-Tel is independent of the CIA; it is a nonprofit company that takes the wish-lists of three popular intelligence agencies (CIA, DIA, and NGA), and tries to find matching start-ups to fund. The CIA both helps fund and reaps the benefit of In-Q-Tel's investments, but does not actually own it. In-Q-Tel currently focuses on projects in the areas of software, infrastructure and materials sciences.
In-Q-Tel works on a number of projects, many of them classified. It has produced technologies to help with face-recognition, handwriting recognition, voice recognition, DNA fingerprinting, automatic language translation, geospatial mapping, detection of trace pathogens and chemicals, power storage, and a number of data management and search engine programs, among many others. One notable sucess story was the development and later sale of the satellite mapping software Keyhole, now known as Google Earth.
In its early days, IN-Q-Tel was also known by the names Peleus and In-Q-It. The 'Q' is a reference to the scientist who provided James Bond with all of his cool spy tools.