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Homeland Security Technology: An Investor's Perspective

When you look at the financial sections of newspapers and magazines over the past few months, you get the sense that capital, entrepreneurs and technology innovators are flowing toward a new homeland security space ' a market in which the buyer is essentially one customer: the federal government.

There's no question that our security-conscious government has money to spend in these areas, during a time when a lot of traditional buyers aren't spending anything. So a military or homeland security play has understandable appeal now, and some defense contractors with low margins have been given high valuations. But if hordes of investors and start-ups expect to make a meal out of the federal market, many of them are going to learn a hard lesson.

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