In-Q-Tel, the Venture Capital Arm of the CIA, Makes Strategic Investment in Growing Online Fraud Prevention Company

Silver Tail Systems, a provider of fraud prevention solutions for Web sites, received solid validation of its products and business model this week. The company has entered into a strategic investment and development agreement with In-Q-Tel (IQT), the not-for-profit, venture capital arm of the CIA.

Launched by the CIA in 1999, IQT’s mission is to identify and partner with companies developing cutting-edge technologies that serve the national security interests of the United States. The firm goes beyond investing money alone, and actively engages with entrepreneurs, growth companies, researchers, and investors to deliver technologies that provide superior capabilities for the CIA and the larger Intelligence Community.

Attacks from online criminals are becoming more sophisticated, probing for weaknesses in an organization’s online architecture and more frequently exploiting legitimate business logic or business logic flaws to gain illicit access or steal information. With this deal, In-Q-Tel acknowledges the problem and believes Silver Tail has solutions that can help.

Silver Tail Systems provides “third generation fraud prevention” solutions to defend websites against business logic abuse. Business logic abuse is a rising concern and extremely difficult to detect and stop. These hijack threats, velocity attacks and gaming schemes are costing companies billions of dollars per year in online fraud.

The company’s Forensics and Mitigation products use behavioral analytics, investigation and real-time disruption to track suspicious behavior and divert the attempted intrusion, leaving legitimate users unaffected.

The company has also developed a cross-industry collaboration cybercrime “alert” system, which provides financial institutions and e-commerce companies fraud protection and helps them stay ahead of today’s sophisticated criminals.

“Silver Tail Systems solution monitors website traffic and identifies anomalies in real-time. Their unique system creates models of what is normal traffic for a website’s population and uses that to identify threats,” said William Strecker, Executive Vice President of Architecture & Engineering and CTO at IQT. “Our strategic investment in Silver Tail Systems enables us to offer this powerful technology to our customers in the U.S. intelligence Community and further protect our Nation’s assets.”

"We are thrilled to be working with IQT to combat adversaries," said Laura Mather, Ph.D., Founder and VP of Marketing at Silver Tail Systems.

Other notable investments made by In-Q-Tel in the space include FireEye (March 2009), Veracode (June 2008), and in November 2002 the firm reportedly invested $3 million in ArcSight, which was recently acquired by HP for $1.5 billion. In-Q-Tel has a track record of not disclosing the details of its investments and agreements, and the financial terms of the Silver Tail Systems deal were not disclosed.

Related Reading: ThreatMetrix Secures $12.2 Million to Help Companies Fight Cybercrime