Jul 12, 20234 min read

Fireworks Edition: June News a Bit Delayed Due to Independence Day

CYBER THOUGHTS NEWSLETTER

July 2023

Happy Independence Day! The time of the year where those of us in the US celebrate our country by terrifying our pets; the fireworks in New York were amazing but our dogs were not impressed.

Before we go on with our normal programming we’d like to take a short victory lap. Last week Lytical Fund II closed, and while the fundraising environment can be called challenging, we are proud to welcome a large number of new investors joining us on our journey. We are humbled by the belief our LP’s have put in us and remain excited about the coming years.

The AI rivalry between the US and China has reached a new level with both sides announcing they will be restricting access to key resources. For the US, the Biden administration is planning to cut off China’s access to cloud computing resources. In turn, China will be restricting exports of key rare earth metals, which are used in chip making. This is just the next move in a series of gambits surrounding the fight for AI supremacy. The US and allies began restricting chip manufacturing capabilities in China earlier this year, with restrictions on chip making equipment and the ability of US citizens to work in China. It has been reported that there is a black market for Nvidia Chips in China with the A100 chips going for $20,000, or double their book price.

We are also starting to see attacks on AI models themselves, we find this especially interesting since it is an entirely new attack vector that hasn’t existed before, which is a rare occurrence in cybersecurity. People have begun to call it Prompt Hacking: a term used to describe a type of attack that exploits the vulnerabilities of LLMs, by manipulating their inputs or prompts. Below we have a link to an article by, friend of the firm, Ross Haleliuk, on which companies that are trying to combat this problem and where the market stands today.

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.

US Set to Restrict China's Access to Cloud Computing

The Biden administration is preparing to restrict Chinese companies' access to U.S. cloud-computing services, the Wall Street Journal reported on Tuesday, citing people familiar with the situation.

This report mentions both the US restrictions as well as China’s intention to limit access to rare earth metals. We should expect more trade-war like behavior surrounding AI from both parties.

Securing AI: State of the Market at the Beginning of Q3 2023

This market map focuses on AI/ML security solutions.

Friend of the firm Ross Haleliuk has created a market map of the companies trying to secure the AI/ML models themselves. It’s a great view on were the security of the AI/ML world is today.

He Spent $140 Billion on AI With Little to Show. Now He Is Trying Again.

Billionaire Masayoshi Son said he would make SoftBank ‘the investment company for the AI revolution,’ but he missed out on the most recent frenzy.

Masayoshi Son has made some of the biggest technology bets in history, and it has been a rollercoaster ride for him. In the latest round the WSJ is questioning Softbanks investments on AI since they seemed to miss out on the current boom.

TRANSACTIONS

Deals that caught our eye.

DigitalOcean Acquires Cloud Computing Startup Paperspace for $111M in Cash

DigitalOcean, the cloud hosting business, today announced that it’s agreed to acquire Paperspace, a New York-based cloud computing and AI development startup, for $111 million in cash.

We wanted to use this space to congratulate our founders Dillon Erb and Daniel Kobran; it’s great to see all of their effort rewarded and we wish them continued success at DigitalOcean.

PODCASTS

What we're listening to.

Artificial Intelligence: Advancing Innovation Towards the National Interest

The US House of Representatives Committee on Science, Space, and Technology is taking action to solve today's pressing issues. Opening Statements:

Chairman Frank Lucas

Witnesses:

Dr. Jason Matheny, President & CEO, RAND Corporation; Dr. Shahin Farshchi, General Partner, Lux Capital; Mr. Clement Delangue, Co-founder & CEO, HuggingFace; Dr. Rumman Chowdhury, Responsible AI Fellow, Harvard; Dr. Dewey Murdick, Executive Director, Center for Security and Emerging Technology Committee

Listen

Cyber Thoughts Podcast Episode 3: With Maxime Lamothe-Brassard

In this episode of Cyber Thoughts, Lucas interviews Maxime Lamothe-Brassard, the founder and CEO of LimaCharlie, a Lytical Venture's portfolio company. Maxime shares his journey in cybersecurity, starting from his time at the CSE, Canada’s national cryptologic agency, through his stints at CrowdStrike and Google, and founding LimaCharlie.