CYBER THOUGHTS NEWSLETTER
Last month we questioned whether deal activity would bounce back in September. Spoiler alert, it did not. Depending on the metric, deals were off ~40-50% in September YoY. This pullback is likely the result of a few factors: the lack of FOMO closing deals quickly, investors uncertainty about the correct price, and firms focusing on triaging their own portfolios before looking for new investment opportunities.
If you spend much time on founder/VC Twitter, you will see people discussing how investors have a lot of dry powder and how that will put pressure on investors to do more deals. We don’t find this idea compelling since there are plenty of factors to offset that. First, funds have been getting deployed much faster than in the past, but their documents don’t force them to invest in one or two years instead of three or four. Also, since most funds can’t announce until after their final close for SEC reasons, but they begin to deploy before that announcement, many funds have already put a portion of that “dry powder” to work. For these reasons, we don’t believe the overhang is as large as reported; thus, it won’t cause more deals to get done in the next year.
With all of this in mind, we still believe it’s a great time to be investing in early-stage venture. While it will be harder for founders to raise, the rounds that do get done will be at more attractive prices and less competition in the market and for talent. This should make the current vintage funds more successful in the long run.
Below are a few of the articles that caught our attention this month. Moreover, we’ve inserted one or two sentences in italics, summarizing each article’s importance. We hope you enjoy and appreciate the material.
WHAT WE'RE READING
Here's a curated list of things we found interesting.
The Uber Hack Exposes More Than Failed Data Security
An attack against Uber by a teenager exposed glaring issues in password controls and showed how they cut corners. This has kicked off a wider discussion about startups and their approach to security.
Uber was hacked this month. The company said that the attacker — a teenager possibly linked to the incident was just arrested in London — most likely obtained the corporate password of an Uber contractor.
AI now lets you expose unseen secrets of legendary artworks
The pace of innovation in AI tools is astounding and they are allowing people to create works in any style just by writing a description or providing a seed image. It’s mind-blowing. An artificial intelligence company has created a new tool that allows users to imagine a world beyond the frame of their favorite artwork.
Twitter may have hired a Chinese spy and four other takeaways from the Senate hearing
Mudge is a well-regarded security researcher who worked alongside our partner Lucas, as well as many of our advisors. While some of his complaints are probably true of many tech companies, there are some accusations that are particularly worrying and unique. Twitter executives put profits ahead of security, leaving the door open to infiltration by foreign agents and hackers, the company's former head of security told Congress on Tuesday.
Deals that caught our eye.
Palo Alto close to buying Israeli cyber co Apiiro
The deal, estimated to be worth upwards of $550 million, will be US company Palo Alto's eighth acquisition in Israel.
With Steve on a break from hosting his show until next season, here is a podcast we
found to be excellent that we think you'll like.
Immutable - Trail of Bits
This month we have a podcast from Trail of Bits, a local cybersecurity firm that has done lots of cutting-edge work and has lately made a name for themselves doing deep research into crypto. Created by ex-NPR storytellers, this episode dives into Bitcoin and has some surprising findings.
Lytical Ventures is a New York City-based venture firm investing in Enterprise Intelligence, comprising cybersecurity, data analytics, and artificial intelligence. Lytical’s professionals have decades of experience in direct investing generally and in Corporate Intelligence specifically.