In-Q-Tel executive warns U.S. is ‘dramatically underinvested’ in cyber defense

A top executive at the CIA’s venture capital arm says the United States remains dangerously underfunded in cybersecurity as emerging technologies such as artificial intelligence reshape the threat landscape.

Katie Gray, senior partner and head of the cyber investment practice at In-Q-Tel, told Frank Cilluffo on the Cyber Focus podcast that the nation’s digital defenses lag far behind the pace of innovation. “We are dramatically underinvested as a nation in our cyber defenses,” she said. “We’re so vulnerable from a cybersecurity standpoint.”

In-Q-Tel was created in 1999 as an independent, nonprofit investor to help the intelligence community tap innovation from the private sector. Often described as the CIA’s investment arm, it uses government funding to co-invest in startups developing technologies with both commercial and national security applications. For every dollar In-Q-Tel invests, Gray said, roughly $40 comes in via private capital – in part, she said, because In-Q-Tel investment adds credibility in the broader market.

Gray said In-Q-Tel’s mission is to bridge Silicon Valley and Washington, connecting fast-moving startups with the slow-moving procurement systems of government. “Our goal is to find the best company that fits that [government] need and requirement, that is excited about working with the government, that has the most cutting-edge technology,” she said.

That focus increasingly includes “over-the-horizon” technologies such as AI, quantum computing and commercial space systems, all of which Gray described as vital to America’s long-term security. She warned that adversaries are already exploiting AI for reconnaissance and malware development. “We can’t be responding to that at human speed,” she said. “We have to be responding to that at machine speed.”

Gray also pointed to mounting risks in software supply chains and operational technology – the industrial systems that run power grids, pipelines and transportation networks. Many rely on legacy components that are difficult to secure but central to daily life. “It could not be a more critical area,” she said.

Space systems, she added, are another overlooked vulnerability as satellites become more interconnected and software-driven. “Everything is connected,” Gray said. “We have more and more software-defined everything – software-based space systems, weapon systems.” As commercial launch and satellite firms grow, she argued, protecting those assets must become a national priority.

In-Q-Tel’s portfolio has included early investments in companies such as Palantir and FireEye – firms that helped define the modern era of defense technology. Gray said that while financial returns matter, the firm measures success primarily by mission impact: delivering tools that enhance U.S. security and resilience.

Gray said In-Q-Tel’s focus remains the same after 25 years: advancing innovation that strengthens U.S. security. “Every day what we’re really focused on is how we can be the best partner and bring the best technology,” she said.

You can find the full episode here.