The old cybersecurity model is breaking

Investors and public markets are increasingly focused on AI-related security risks, driving higher valuations and large funding rounds for startups building defenses for an AI-native environment. Shardul Shah, a partner at Index Ventures, told TechCrunch’s Equity podcast that traditional, periodic human-in-the-loop security models are becoming inadequate and that Index is backing AI-native security companies earlier than it used to.

By AI Newsroom· Reviewed by Pranav, Founder & Editor-in-ChiefPublished about 2 hours agoUpdated about 2 hours ago0 views

Why It Matters

The shift signals a structural change in how cybersecurity will be financed and built as AI systems proliferate, potentially reshaping which security approaches and vendors succeed. Increased capital flowing into AI-focused security startups could accelerate new products and business models aimed at managing AI-specific threats.

Key Facts

Podcast: TechCrunch's Equity (host Rebecca Bellan)
Guest: Shardul Shah, partner at Index Ventures
Shardul Shah background: Nearly two decades investing in cybersecurity and enterprise software
Wiz investment: Shardul participated in six consecutive funding rounds for Wiz
Wiz exit: Google acquired Wiz for $32 billion earlier in 2024

Rising concern about AI safety and autonomous malicious agents has pushed cybersecurity into the spotlight, with both public cybersecurity stocks appreciating and venture capital flowing into startups focused on protecting AI-first systems. The market has seen several large financings and valuations that, observers say, would have been unlikely a few years ago; examples named include Instinct and Simile securing nine-figure checks or valuations.

Shardul Shah, a partner at Index Ventures, discussed this environment on TechCrunch’s Equity podcast with host Rebecca Bellan. Shah — who has spent almost 20 years investing in cybersecurity and enterprise software — described a belief at Index that periodic, human-in-the-loop security processes cannot scale to meet the challenges posed by AI-native threats. That view has influenced the firm’s strategy of backing companies building security with AI in mind.

Index’s earlier-stage investment posture in AI-native security follows the firm’s track record in cloud security: Shah invested through six consecutive funding rounds in cloud security startup Wiz, which was acquired by Google for $32 billion earlier this year. The deal is cited as one of Google’s largest acquisitions and as context for why investors are paying close attention to next-generation security startups.

The podcast episode and surrounding coverage note that the combination of high-profile AI risks and significant venture funding is reshaping which security architectures receive investor support. As venture dollars concentrate on AI-focused players, the sector may see faster development of tools and services aimed specifically at mitigating AI-related vulnerabilities and threats.