The New Security Agenda

This summer, OpenAI’s agents broke out of a cybersecurity evaluation and breached Hugging Face’s production systems. They exploited vulnerabilities, used stolen credentials, and worked their way into another company’s infrastructure, all to get the answers to their tests. OpenAI’s incident report describes how the models chained together the steps to get there.

This was just a preview. Since then, AI has helped uncover weaknesses in software that much of the internet depends on. Just last week, companies were scrambling to patch critical flaws in PHP, which powers roughly 70% of websites. The flaws had been sitting there for more than a decade before researchers working through OpenAI’s Patch the Planet initiative helped uncover them. That same day, eMudhra, a certificate authority trusted by every major browser, was found to have used encryption keys so weak that one of them was just the number 4. READ MORE

Brothers Built a $1.1 Billion Company Without Venture Capital. Their Customers Funded It Upfront

AI startups pulled in $102 billion of venture capital last quarter, 64 percent of everything invested worldwide, and a record 27 companies raised rounds of $1 billion or more, according to Crunchbase data published October 5.

Phil and Dom Kwok, two London-born brothers, have not taken a dollar of it. They say EasyA, the AI and blockchain developer education company they started in 2019 from their childhood bedrooms, is now worth $1.1 billion, and they are taking it public through a direct listing while still owning all of it. READ MORE

Even Benchmark thinks AI is eroding the venture pact against backing rivals

For decades, the unwritten rule of venture capital was that a firm doesn’t back two companies that compete head-on. But speaking at TechCrunch Disrupt earlier this week, the partners of Benchmark readily acknowledged that the AI boom is straining that rule.

It’s been on the verge of snapping for some time. The towering AI labs OpenAI and Anthropic share dozens of the same investors at this point. Then, at the end of September, Factory, a startup that builds an AI agent to write software, said it was firing board observer and adviser Chris Degnan for “unethical conduct involving Cognition,” its direct rival and the maker of the Devin coding agent. Factory’s CEO alleged Degnan had discussed a job at Cognition while privy to Factory’s board-level discussions. Degnan said he had already resigned and denied sharing anything confidential. Soon after, he announced he was joining Cognition as chief revenue officer. Powerhouse investor Vinod Khosla sided with Degnan on X, blasting Factory’s CEO and calling the company “a struggling second tier competitor.” Khosla Ventures backs both companies. READ MORE

AI startups attract significant venture capital in September

Startups focused on artificial intelligence development and deployment continued to attract substantial venture capital investment in September, with a particular emphasis on AI security and infrastructure.

According to reporting by CRN, AI-focused startups secured significant funding in September, with notable investments in companies like Cyera and Island, which raised $400 million each for their data security and enterprise browser platforms, respectively. READ MORE

The Week’s 10 Biggest Funding Rounds: Almost All About AI

This week’s list of the largest U.S. startup funding rounds was pretty much all about AI. That includes the biggest financing — a $1 billion round for Instinct, a developer of AI assistants for everyday tasks — as well as most of the rest of the Top 10. Other large fundraisers include EliseAI, which is deploying AI for the home rental sector, and Armadin, an AI cybersecurity startup. READ MORE

AI is concentrating VC’s power law in a handful of winners

As AI claims more and more capital, VC’s power law is becoming steeper, according to investors at AI conference HumanX in Amsterdam last week.

Venture, as an asset class, has always been governed by the principle that most investments will fail and that a small number of portfolio companies will generate the vast majority of a firm’s returns. AI is accelerating the divide between the “winners” and the rest. READ MORE

Should Your AI Business Raise VC? For Most Founders, the Honest Answer Is No. Here’s Why.

Every week another founder shows up building the same business: an AI agent that does something useful for small and medium businesses. Website agents. Booking agents. Customer service agents. Most of them are asking the same question right now — whether to raise venture capital to go after it.

The honest answer for most of these businesses is no. Not because the idea is bad, but because the business model underneath it has a revenue problem baked in, and the numbers on that problem are already public. READ MORE

AI captures 77% of global VC dollars as exits remain concentrated

Artificial intelligence has become the dominant force in global venture capital, capturing more than three-quarters of venture dollars, while the exit market remained concentrated among a small group of large IPOs, according to HSBC.

AI and machine learning accounted for 77% of global venture deal value in the six months through June 30, up from 30% in 2023, while its share of deal count rose more modestly to 36% from 26%, analysts led by Shiva Joon said in an HSBC report. The gap showed that capital was increasingly flowing into a smaller number of much larger AI rounds. READ MORE

Ex Reddit CEO Splits AI Risk In Two And Venture Capital Is Funding Both

Former Reddit CEO Yishan Wong posits that AI safety debates conflate two distinct dangers: existential risk from uncontrollable superintelligence and human misuse of powerful AI. He argues remedies for each are diametrically opposed; distributing AI widely to mitigate misuse exacerbates existential risk, while restricting development to prevent existential threats concentrates power, increasing misuse potential. This fundamental split explains why investors are simultaneously backing controlled AI development, like Anthropic, and open-source models, such as Mistral, effectively hedging their bets. While some critics suggest accumulated misuse could lead to existential outcomes, Wong's framework clarifies the persistent disconnect in AI policy discussions and investment strategies, where vast capital supports conflicting approaches. READ MORE

Mike Vernal Says Software Moats Are Dying And Founders Must Do It All

Venture capitalist Mike Vernal argues AI is dismantling traditional software moats, like switching costs, as engineering costs approach zero. He predicts a "barbell" market: dominant AI-native platforms will own entire enterprise buying centers, exemplified by companies like Rippling and Clay, forming the top tier. Conversely, a vast long tail of small, often lifestyle-oriented software, built on platforms such as Lovable, will emerge at the bottom. Vernal warns that the middle market of point solutions faces obsolescence. He cites AI agents automating integrations and rapid code generation as key drivers. While some dispute the immediate impact due to embedded systems, Vernal advises founders to focus on owning complete buying centers and prioritizing shipping velocity. The ultimate platform for the long tail remains an open question. READ MORE

Family offices are clamoring for AI investments

For the wealthy families who manage their own money through a family office, the math right now is simple, according to Djoann Fal, a family office advisor and investor at the private wealth platform Atlas Capital in San Francisco.

A family office might want to put money into something like green energy for the long haul. But in the current environment, if a fund manager offers a deal that could triple an investor’s money over three years, and another deal could triple it in three months, the choice is easy. As Fal put it: If they have one deal that has the chance to make them 3x in three years, and another deal that could make them 3x in one quarter, “they’re just going to invest in the AI deal that does 3x in three months.” READ MORE

AI is making people work harder, not less: ‘I worked a 26-hour day’

Lucy Guo is no stranger to the always-on culture that defines Silicon Valley startups. In fact, it was partly this mentality that made her a billionaire by the time she turned 30, having made a fortune from the sale of her startup Scale AI to Meta.

Yet, at a time when AI and autonomous agents have promised to make every worker’s life easier, Guo says, for some, it’s doing the opposite.

“I think AI is making people work harder actually because you have to be awake for your agents to be running,” Guo said in an interview on the Fortune Daily Show this week. “I think it was last week I worked a 26-hour day because I refused to go to sleep.” READ MORE

OpenAI Eyes $1.2 Trillion New Round While Sam Altman Delays 2026 IPO, Calling it an ‘Ill-Advised Moment’

OpenAI has held early talks with investors about a new private funding round that could value the ChatGPT maker at more than $1.2 trillion. This new raise comes six months after the company completed a $122 billion deal in March, which set an $852 billion value backed by major tech investors like Amazon AMZN +2.28% ▲ and Nvidia NVDA +2.61% ▲ . If completed, the new deal would serve as a final private funding step before an initial public offering. READ MORE

Balancing caution, AI acceleration and liquidity in M&A

Middle-market M&A and venture capital are operating in a market defined by selective deployment and heightened discipline. While capital reserves remain substantial, buyers and investors are deeply scrutinizing seller fundamentals to prioritize the best companies and the best fit. Also a major factor is artificial intelligence, which has emerged as both a complex source of diligence friction and a powerful valuation catalyst, one that’s reshaping how deals are priced, built and won.

According to Brian Zuercher, a partner with The Northbound Group, today’s M&A market can be defined as a simultaneous mix of caution and rapid deal-making. READ MORE

Two-thirds of all venture capital is now flowing to AI startups and non-AI founders are feeling it

If you're raising a seed round for a non-AI startup right now, you're not just competing with other startups. Look at who else is in the room. OpenAI, Anthropic, xAI, and Waymo together raised $188 billion in Q1 2026, according to Crunchbase. Four rounds. That was about 65% of all global venture investment for the quarter. The market did not simply get bigger. It split.

Crunchbase put Q1 global startup funding at about $300 billion, while TechCrunch, citing the same data set, reported $297 billion. Either way, the number is absurdly large. AI companies took roughly $242 billion, or about 80% of the total, according to Crunchbase's April 1 report. That is not a broad venture recovery. It is a handful of companies pulling the oxygen out of the room. READ MORE

AI Investment Boom 2026: Is This a Bubble or the Beginning of a Sustainable Growth Cycle?

The artificial intelligence investment boom of 2026 represents one of the most significant capital allocation shifts in modern financial history. With AI companies now capturing over 50% of global venture capital funding and major tech giants spending billions on AI infrastructure, investors are grappling with a fundamental question: Is this a speculative bubble reminiscent of the dot-com era, or is it the dawn of a genuine technological transformation that will reshape the global economy?

The evidence increasingly points toward a nuanced reality. While certain segments of the AI market—particularly infrastructure plays with unclear monetization paths—show bubble-like characteristics, the underlying demand for AI chips, software, and services appears structurally sound. Nvidia's confirmed order pipeline of $1 trillion through 2027, AMD's accelerating growth with 76% projected earnings increases, and real productivity gains from AI adoption suggest this boom has substance beyond mere speculation.

For investors, the key is distinguishing between companies riding the AI hype wave and those building sustainable competitive advantages in a market that could exceed $1.3 trillion by the end of 2026. READ MORE