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IF A BANK IMPLODES, AND NO ONE MISSES PAYROLL, DOES IT STILL MAKE A SOUND?


CYBER THOUGHTS NEWSLETTER

MARCH 2023


Stories of the failure of Silicon Valley Bank are already starting to fade from the popular business press. Still, it will have ramifications for the startup ecosystem for years to come. While depositors were protected from losses by the government, the equity and bond holders of the company were wiped out. Meaning that this wasn’t a bailout similar to those of 2008.


This has sparked a debate about whether depositors with greater than $250,000 per account should be backstopped by the US government if a bank is mismanaged. While this debate is interesting, in practice, two things are being done by depositors. The first is a flight to the systemically important big four banks. The second is a strategy where deposits are split into multiple accounts across many banks, each account being below the $250,000 limit. Neither of these situations seems like the outcome that regulators would want.


The other consequence of SVB’s failure is that venture debt, loans to startups, will likely become much more expensive. Whether this is a positive or negative for venture investors is open to debate, but it is definitely not ideal for founders who will now have less access to cheap capital.


Overall, the incident ended up being a ton of work by the venture community over a weekend that ended when the government stepped in to make sure that it would be business as usual on Monday, thus ensuring payroll was made by a vast number of startups. While the immediate reaction and work turned out to be all for nothing, the long-term ramifications may be felt for decades.


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.


Biden National Cyber Strategy Seeks to Hold Software Firms Liable for Insecurity

Markets have imposed “inadequate costs” on companies that build vulnerable technology, it says.

Much like a carbon tax, the administration is seeking to price externalities into the creation of software. While many believe this isn’t a viable solution it is a bold proposal that could change the entire landscape of cybersecurity.





Let the AI Coding Wars Begin!

The way artificial intelligence can rewrite software will have huge implications for the tech industry—and everyone else, too.

The strides large language models have made in programming in the past 12 months has been nothing short of astounding. The joke has been that programmers really spent 90% of their time doing searches to find the code they need, now they can just let ChatGPT write the first draft for them and then round off the rough edges.






The Age of AI has begun

Artificial intelligence is as revolutionary as mobile phones and the Internet.

Bill Gates gives his impressions on the power of AI and points out that real care needs to be taken to ensure that these tools are used to help the entire world population instead of just those who are already well-off.






TRANSACTIONS

Deals that caught our eye.


Hewlett Packard Enterprise Fortifies Network Security with Acquisition of Security Service Edge Provider Axis Security

Axis Security, a remote access platform was acquitted by HP for approximately $500M.








PODCASTS

What we're listening to.

AI Explained is a YouTube channel covering the biggest news of the century - the arrival of smarter-than-human AI. What is happening, what might soon happen, what it means and what we can do with it.


GPT 4 Can Improve Itself

GPT 4 can self-correct and improve itself. With exclusive discussions with the lead author of the Reflexions paper, AI Explained shows how significant this will be across a variety of tasks, and how you can benefit.






ABOUT LYTICAL

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.


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