Shaping Investment: Spurring Investment in Cyber Sector Start-Ups

Shoaib Yousuf

Investments in cybersecurity startups have declined due to global economic stress, rather than any industry-specific issues. Uncertainty surrounding where and when to invest in the current economic conditions has caused investors to be cautious. In 2021, the number of unicorns (startups valued at over $1 billion) in the cybersecurity sector has dropped to six, compared to 36 in previous years. This decline in investments serves as evidence of the overall decrease in cybersecurity startup funding.

However, despite the current dip, the cybersecurity industry still holds immense potential and is expected to bounce back once the right challenges are addressed. Historical success stories of cybersecurity businesses, known as unicorns, highlight the profitability and viability of the industry. Startups that focus on tackling the right challenges can attract capital and thrive in the cybersecurity sector. Thus, maintaining a positive sentiment toward the industry’s potential to overcome the current decline in investments is crucial.

Looking ahead, the market outlook for cybersecurity remains promising and is anticipated to improve in the next few years. While the global economic stress has caused investors to pull back on startup investments, there is optimism based on both the historical performance of the industry and its potential for future growth. Therefore, despite the temporary setback, a positive sentiment can be maintained for the future of the cybersecurity market.

Artificial intelligence (AI) is impacting all industries and offering new growth and innovation opportunities. Industries, startups, and companies that embrace and understand the potential of AI are well-positioned to become leaders in their respective fields. This positive sentiment toward AI stems from its ability to revolutionize how challenges are perceived and addressed across various industries.

Furthermore, infusing AI into cybersecurity products is considered crucial for scalability, operational efficiency, and unlocking new insights. The availability of AI tools to cybercriminals makes it imperative for cybersecurity products to adopt AI to effectively counter emerging threats. By incorporating AI into cybersecurity, businesses can enhance their capabilities to detect and respond to threats, ensuring a more robust security infrastructure.

In the domain of AI, there are AI-centric products, fully driven by AI like Google’s JetGPTs, and AI-infused products, which involve integrating AI into existing technology offerings. Tech leaders such as Oracle, Salesforce, and Microsoft have already begun infusing AI into their products. This highlights the availability of different types of AI-driven or AI-enhanced products within the market.

Challenges such as scalability, cost, and investment persist for startups in the tech industry. However, the advent of GPU as a service over the cloud is expected to make tech scalability more affordable for startups. This development can potentially mitigate the barriers that tech scalability currently poses for startups, leading to increased opportunities in the tech industry.

Regarding investments in the tech industry, there is a positive sentiment for startups as hyperscalers increasingly invest in tech. Hyperscalers, such as Amazon, Google, and Microsoft, provide cloud services and have substantial investments in hardware, software, and infrastructure. This investment influx, combined with the affordability of GPU as a service over the cloud, indicates a growing opportunity for tech startups to secure funding and support for their ventures.

In the realm of cybersecurity, public-private partnerships hold promise, but their effectiveness relies on various factors. Factors such as economic conditions, market size, maturity of a particular country, fragmentation, and demand for cybersecurity services impact the efficacy of these partnerships. Moreover, countries that lag in cybersecurity capacity may require a central role from the government to address gaps and stimulate growth. This neutral sentiment underscores the need to consider multiple factors for successful public-private partnerships in the realm of cybersecurity.

Supporters of government involvement and proponents of public-private partnerships assert that they can facilitate growth and innovation in cybersecurity. Governments can play an essential role in bringing together the private sector, stimulating research and development activities, and incentivizing beneficial initiatives. Public-private partnerships, in turn, can support startups and foster innovative ideas in cybersecurity. By aiding in technology transfers and reducing the high costs associated with patenting, such partnerships provide crucial support for startups in the cybersecurity domain. This positive sentiment highlights the potential benefits of government involvement and public-private collaboration in driving growth in the cybersecurity sector.

In conclusion, investments in cybersecurity startups have faced a decline due to global economic stress, rather than any inherent flaws within the industry. Nevertheless, the cybersecurity industry holds significant potential and is expected to rebound once the right challenges are addressed. The market outlook for cybersecurity remains promising, and the industry is projected to improve in the coming years. The impact of AI is being felt across various industries, and its integration into cybersecurity products is crucial for enhanced security measures. Investments in the tech sector, particularly for startups, are expected to increase, aided by the support of hyperscalers and affordability of scalable technology solutions. Public-private partnerships are deemed effective in cybersecurity, depending on economic conditions and national dynamics. Government involvement in fostering such partnerships can stimulate growth and support startups in the cybersecurity field. Overall, these observations and insights highlight the various factors and dynamics that shape the cybersecurity and tech industries, and offer a comprehensive understanding of their present situation and future potential.

Moderator – Nisha Pillai

Cybersecurity startups are recognized for their crucial role in driving innovation and addressing emerging threats in the sector. These early-stage startups leverage capital from investors to expand their technological offerings and global reach. Their agility and fresh thinking enable them to find gaps and opportunities in the industry. However, they face challenges such as competition from larger firms and a drop in investments. The impact of Artificial Intelligence (AI) on cybersecurity startups is seen as crucial, with the potential to enhance the quality of cybersecurity products and services, but also posing new cybersecurity challenges. Government support is necessary to help these startups thrive, and specific schemes aimed at assisting them in developing saleable products and establishing a strong company structure are in place. Overall, cybersecurity startups play a significant role in addressing the evolving landscape of threats and innovation in the sector.

Kenneth Pentimonti

The analysis highlights the significance of investing in cybersecurity startups for both the economy and societal security. These startups play a crucial role in driving innovation in the cybersecurity space, as large companies and governments are unable to meet all the demands. The continuous evolution of cyber threats requires new technologies that can adapt to these changes, hence startups are well-positioned to provide innovative solutions.

One important aspect for cybersecurity startups is their ability to differentiate themselves in a crowded market. Since many startups appear to be offering similar services, it is crucial for them to clearly understand and communicate their unique offerings. Differentiation can often be achieved from a technological standpoint, where startups can showcase their advanced capabilities and features.

Understanding the market and clearly defining it is another key factor for success in the cybersecurity sector. As cybersecurity spans across various areas such as networks, data, cloud, and communication channels, companies need to define the size and scale of their target market. This market knowledge allows them to effectively tailor their products and services to meet the specific needs of their customers.

Capital investment in cybersecurity startups is necessary for their growth and expansion. However, investment capital is expensive, and companies need to have a clear plan on how they intend to use it. Ideally, the capital should be used for additional capabilities development and sales/marketing efforts to increase the reach and impact of their products.

Investing in cybersecurity startups presents a great opportunity, but careful assessment is required. The cybersecurity sector is growing rapidly, attracting many new entrants. Therefore, investors need to carefully evaluate these startups and their unique offerings to differentiate them from others in the market. Having a clear understanding of how the investment capital will be utilized is also crucial for ensuring a successful investment.

Artificial Intelligence (AI) holds tremendous potential in the cybersecurity space. AI can be infused in products to make them faster, easier to use, and more effective. It can also help sort through large volumes of data quickly, which is invaluable in identifying threats and external attacks on networks. However, it is essential to prioritize the security of AI models and the data feeding into them to avoid potential vulnerabilities and breaches.

The cybersecurity sector has experienced significant growth in recent years, with the emergence of several successful companies. This growth is expected to continue as the demand for robust cybersecurity solutions remains high. Unicorn companies, those with valuations over $1 billion, are becoming increasingly common in the sector, highlighting its potential for economic growth and job creation.

Public-private partnerships have been instrumental in driving technological innovation, particularly in the realm of cybersecurity. Success stories from various countries, such as the US, UK, and France, demonstrate how collaborations between government and industry have led to the development and adoption of innovative technologies. These partnerships provide support, funding, and mentorship to early-stage companies, helping them secure funding and refine their products.

In conclusion, investment in cybersecurity startups is crucial for both economic growth and societal security. Startups bring valuable innovation to the constantly evolving cybersecurity space, and their differentiation and understanding of the market are essential for success. Investment capital should be used strategically, and careful assessment of startups is necessary to make successful investments. AI presents significant opportunities but requires a focus on security. The cybersecurity sector has experienced impressive growth, and public-private partnerships have played a key role in driving innovation. Supporting early-stage companies through mentorship and funding can help them overcome initial challenges and contribute to industry growth.

Peter Sund

The analysis highlights the potential and necessity of cyber security startups and the use of AI. Despite the dominance of large corporations in the industry, there is still room for startups to thrive due to their agility and innovative thinking. Startups are more agile and can identify gaps and opportunities missed by larger companies.

Prominent figure Peter Sund believes in the importance of startups in the cyber security sector. He recognizes their agility and innovation, emphasizing their role in identifying untapped potential and addressing emerging challenges.

Regarding AI, there is a lot of hype surrounding its applications, but it has yet to fully permeate all aspects of society. However, AI systems have the potential to manage companies and increase productivity.

There are concerns about the misuse of AI, as there is a history of technologies being misused. However, this also presents an opportunity for cyber security startups to provide solutions and counter malicious actors.

AI will likely be needed to counter bad AI in the cyber security field, highlighting the importance of investing in cyber security startups to develop and deploy AI solutions.

Government support is important for smaller companies, especially when they are engaged in innovative ventures. Smaller companies often struggle with running their businesses and acquiring funding. Government programs can help them thrive and contribute to economic growth.

However, caution is advised to ensure that government intervention does not stifle competition. Maintaining healthy levels of competition is essential for fostering innovation.

For countries with smaller internal markets, such as Finland, the focus should be on international trade. By expanding their trade networks and engaging in global partnerships, these countries can spur growth and innovation.

In conclusion, the analysis underlines the relevance and potential of cyber security startups in an industry dominated by large corporations. It highlights the importance of their agility and innovative thinking. The analysis also emphasizes the promise of AI in managing companies and increasing productivity, while acknowledging the risks of its misuse. Government support for smaller companies is recommended, as long as it does not compromise competition. Lastly, international trade is seen as crucial for countries with smaller internal markets to achieve growth and sustainable development.

Juliette WilCox CMG

Investing in and supporting cyber security startups is crucial for the resilience and growth of the industry. The UK government recognizes the value of nurturing a successful ecosystem of cyber startups and the critical role they play in government, business, and society. These startups often drive innovation and come up with unique solutions due to their freedom to think and act differently.

However, small companies, including cyber startups, face challenges in business planning and effectively communicating their strategies. They may lack clarity in their business plans and struggle to articulate their value proposition to stakeholders. Additionally, finding the first customer can be a significant hurdle for small companies, as they often lack an existing customer base.

To stay competitive, small companies must have a well-defined plan for scaling and continuous innovation. While they may have innovative products, the risk of competitors copying their ideas or technology is ever-present. Therefore, small companies must continually evolve and innovate to maintain a competitive edge.

It’s worth noting that some small companies may start with the hope of being acquired by larger entities. This acquisition strategy allows them to benefit from the resources and expertise of a larger organization.

Juliette, a supporter of small companies’ growth, emphasizes the importance of aiding these companies in understanding their business lifecycle. This support includes helping them export their products, expanding their market reach.

One common challenge for startups, including cyber startups, is effectively marketing their innovative ideas and technology. While many startups have good ideas and technology, they often lack the knowledge and expertise in marketing and sales. Support systems in the UK, such as the National Cyber Security Centre (NCSC), Cyber Runway program, and clusters program, provide assistance and guidance to startups in marketing their products.

Startups should be willing to enter into support ecosystems that provide the necessary resources and mentorship for business development. Recognizing the logical business development process is crucial for startups to navigate the challenges they may face in their growth journey.

While attracting venture capital funding is often seen as an achievement for startups, it shouldn’t be their end goal. Startups should focus on developing viable products and building a sustainable business model.

In the realm of cyber security, specific schemes and programs in the UK support startups in developing viable products and business strategies. The UK’s NCSC offers various programs that help cyber security startups grow into viable companies. These programs provide opportunities for startups to connect with UK and overseas partners, mentors, and access financing options. For example, the “cyber runway” scheme supports companies at all stages of development, providing access to markets, mentorship, and business planning assistance.

The government plays a crucial role in supporting and connecting cyber security startups with industry partners. By doing so, the government ensures the development and growth of these startups, enabling them to effectively tackle future cyber security challenges.

In conclusion, investment and support for cyber security startups are fundamental for the resilience and growth of the industry. The UK government actively fosters an environment conducive to the success of cyber startups. Additionally, small companies, including cyber startups, face challenges in business planning, customer acquisition, scaling, and market competition. Government intervention and support, as well as the willingness of startups to enter into support ecosystems, are crucial for their growth and success. With the right support and guidance, startups can develop viable products, establish a strong market presence, and contribute to the overall growth of the cyber security industry.

Moderator – Nisha Pillai:
Investment in Cyber Sector Startups, Kenneth Pentimonti, Principal and European Manager, Paladin Capital Group, Juliette Wilcox, CMG, Cyber Security Ambassador, Department for International Trade, UK, Peter Sund, Chief Executive Officer, Finnish Information Security Cluster, FISC, Nisha Pillai, Moderator, International Moderator, Former BBC Presenter, Shoaib Youssef, Managing Director and Partner, Boston Consulting Group. Excellencies, ladies and gentlemen, good afternoon and welcome to Sparring Investment in Cyber Sector Startups, that’s quite a mouthful really, Cyber Sector Startups and you’re going to hear those words, Cyber Sector Startups, over and over again in the next half hour or so because we’re going to talk about why it’s so important to create a thriving ecosystem of cyber security startups and also big firms but it’s not enough to have big ones. Why is that? That’s what we’re going to be discussing. What can small startups do to make themselves more attractive to investors? And more important of all, what can governments do to support small cyber startups? Let me introduce you to our eminent guests. We have at the far end with us someone who knows all about cyber security investment because that’s what his business does, Ken Pentimonti, Principal and European Manager of the Paladin Capital Group, welcome Ken. Sitting next to him is Shoaib Yusuf, Managing Director and Partner of the Boston Consulting Group based in Dubai, he’s just flown in. We are delighted to welcome Her Excellency Juliette Wilcox-CMG who is the Cyber Security Ambassador for the UK government, welcome Juliette. And finally from Finland, Peter Sund, CEO of the Finnish Information Security Cluster. So shall we get stuck right in? Your Excellency Juliette Wilcox, I’d like to ask you for the British government’s perspective first off on the importance of a flourishing ecosystem of small and innovative cyber security startups.

Juliette WilCox CMG:
Thank you, well it’s a real pleasure to be here and talking about the ecosystem is absolutely at the heart of the UK government’s cyber strategy and that reflects I think the importance we attach to building a really strong and resilient cyber security industry to support businesses, to support societies, to support the government. But it has to start somewhere and quite often when you’re thinking about innovation, about new ideas, about taking risks, about thinking things differently, then some of these are things that flourish out of very sort of small groups of thinkers, possibly connected to academic institutions, people who have come up with a good idea and are just trying to put it together and not necessarily bound by a grand strategy for a large company or indeed the sort of directive finance that sometimes comes with that. So you can get some of the incredible innovation that comes out of small startup companies thinking this through. But of course and as I’m sure we’ll explore today, it’s not as straightforward as that but frequently it’s where the spark, the innovation and the mad idea comes from in the first place. And for the UK, making sure that that access to that innovation and that innovation is allowed to flourish is absolutely at the heart of our sense of what the ecosystem needs to be supported by.

Moderator – Nisha Pillai:
Thank you very much for getting us going. Ken Pantamonti, well Paladin this is what you do, security investments, cyber securities, you have one fund devoted just to cyber security investments. So what are the key benefits for investors and the broader cyber security ecosystem from investing in early stage small startups?

Kenneth Pentimonti:
Well thanks Nisha, it’s a pleasure to be here and yeah I think there are multiple benefits to invest in early stage startups in the cyber space. Obviously first it’s we believe a fantastic place to invest just from a pure returns perspective. We think that the cyber security sector is a huge and growing area for all of the reasons that we’ve been discussing over the last couple of days. It’s a space, a sector that’s critical for national security, for corporate security, for the betterment of our society. And so it’s a sector where the technologies that we invest in those early stage companies are critical. And as an investor that makes for a fantastic area to invest early. Those companies use our capital to then hopefully grow and expand both their technology as well as their footprint globally and creates hopefully for us some very attractive returns. That’s from an investor standpoint. From a greater societal and cyber security ecosystem standpoint, early stage startups are critical. They’re really the engine for innovation in the whole space. Large companies, governments can’t and won’t do everything that’s needed to innovate and to create next generation technologies. Cyber security is very dynamic. It’s continually changing and it needs new technologies that adapt to those changes and address the issues. And startups are a key to doing that.

Moderator – Nisha Pillai:
So we’ve just heard from Ken Plantamonte and also from Juliet Wilcox how important it is to have those early stage small companies because they are the engines for innovation. But yet I wonder how easy is it for them to survive? What is the space for them? And I’d like to put that question to you, Peter Sund, if I may. I’ve been puzzling about this. Of course, cyber threats are increasing and therefore there’s a room and a demand for innovation. But at the same time, is there space for startups? Or is it being dominated by the really big, the behemoths, the giants?

Peter Sund:
Well, indeed, the dominance is rather evident also for the big players. That is certainly true. But it’s also necessary because cyber security in terms of looking at the sort of customer base and organizations who essentially virtually everyone needs cyber security products and services, so a lot of it is like mass commodities, one could say. But on the other hand, like we just heard, the fact is that the innovation part and sort of finding the gaps, what exists in the market, that is quite often done actually by the smaller actors and startups because they are much more agile and there is always some kind of new thinking involved there that something is missing, that there is a gap, there is an opportunity, and hence the kind of, I would even say, the agility that comes along with startups. It’s kind of in the DNA of being small.

Moderator – Nisha Pillai:
Indeed, indeed. So they’re both of the same thing, really. The small companies are finding those gaps, finding the opportunities and coming up with the creative thinking. And so I’m sorry to be a slightly pessimistic voice here, but Shoaib Yusuf, may I ask you, why is it that investments in startups this year, cyber security startups in particular, I mean, has plummeted? And is that something we should be worried about then?

Shoaib Yousuf:
Thank you, Nisha, for such a kind of important question which is on the top of pretty much every entrepreneur. They have been like trying to kind of understand, is this the right time to kind of launch their startups? But before I answer this question, I would like to take this opportunity to also thank GCF Institute for uniting the brightest minds in the cyber security industry to discuss such important topics. Now look, when it comes to kind of like the timing of the startup, it is not only cyber security which is actually in the challenging time. We have a global economical stress, and because of that, many of the investors are very reluctant in terms of where to invest, and is this the right time to invest? So I don’t think so that cyber security as a topic, as an industry, is at the risk of that. So it will come back. Now, if I look at the history, we had 36 unicorns in cyber security as compared to six in 2021. So I’m fully optimistic that cyber security industry is there and gonna thrive, and there is a huge potential, and I will see that it will come back. So I would not be too worried that it is 23 because of the investors are not investing in cyber security, which should be discouraging for our entrepreneurs. I think there are opportunities if your startup is tackling the right set of challenges, there are opportunities to get the capital. So I think the market is looking quite promising, and I’m sure that in the coming months, and hopefully by 24, 25, we will see much better outlook.

Moderator – Nisha Pillai:
Okay, thank you very much, Shoaib. Juliette Wilcox, so you and your team, your department works closely with cyber security providers, big and small. From your perspective, what do you see as the particular challenges that face small companies?

Juliette WilCox CMG:
So I think my particular team is obviously looking to help companies to export their products, but that’s quite a tricky thing for very small companies. The first thing at that stage is they’re often not completely clear what their business plan is, so they know they’ve got a great product. They may have a lot of technical brain power behind it, but they haven’t necessarily developed either the business plan or the ability to communicate that. So there’s a thing about having the right people and employing the right people to support your growth at the right time. The second thing is finding your pathway to a customer, and when you’re very small and you’re a startup, you don’t have customers. So who’s your first one, and who is the customer that is your reference customer that you can talk to and talk about to others as well, and particularly if you’re trying to sell into government, you need to have probably sold into government before another government will buy from you, because that’s that sense of, I don’t know if it works, and I’m not sure who I can see who is a bit like me as a potential buyer. And then I think the third thing is how do you have a plan to scale and to know what you’re going to do next? You might have a product that is innovative, but as soon as other people see that, there’ll be a rush to copy. So what is your next plan, and how can you make sure that you can quickly scale up to the size that your potential customers need? So that understanding of that sort of business life ahead of you, and that’s something that I think people need to think about perhaps earlier than they do. There are ways of helping them. And the other alternative, of course, is some of them start up in the hope of being bought by somebody bigger. So again, are you really clear about where you want to take the culture and the journey of your startup, what your future looks like, who your customers are likely to be, and how you’re going to explain yourself to them in order to make sure that they can understand your product and then fit it into their cupboard of cybersecurity products?

Moderator – Nisha Pillai:
So it sounds to me like you’re saying that many startups have very good ideas, they’ve developed the technology, but they don’t necessarily know how to market it, how to turn it into something that is a viable business and bring in revenues.

Juliette WilCox CMG:
I think that’s right, and that’s where I think they can get support. And certainly in the UK, we provide quite a bit of support through various schemes run by the NCSC or through our Cyber Runway program or through our clusters program. So you can get mentoring advice, and it’s being willing to step into that ecosystem of support and making sure that you don’t necessarily think you know it all because you are the masters of the technology, but recognize there is actually a sensible business development process to go through, even if you’re attracting a great deal of venture capital money potentially, that’s not the end of it for you. You have to think that through logically. Excellent.

Moderator – Nisha Pillai:
So let’s get an investment perspective on this now. Ken Pentamonte, how can cybersecurity startups make themselves more attractive to investors?

Kenneth Pentimonti:
That’s a great question, and it’s one that we deal with every day, looking at dozens of companies every week. What I would say, first off, cybersecurity is, while a very, very attractive space and one where we believe is a huge and growing area to invest, it has attracted lots of companies. And as a result, many of these companies often become very difficult to differentiate between. They look on the surface like they’re doing very similar things for businesses. So I think one of the first things right off is for startups to understand and very clearly communicate what they’re doing different. How they differentiate, usually, and ideally, it’s from a technology standpoint, and there’s a barrier to entry that they’ve developed. And so to understand that, understand their competitive landscape, and to be able to communicate that differentiation clearly, I think is one very, very important piece. Also to be very clear as to what specific part of the market that they’re trying to go after. Cybersecurity is a very broad space. Securing digital infrastructure can be across a number of areas, networks and data, and across cloud, across different communication channels. So very important for the company to understand its market, be able to define that size and the scale of that market, and do that in a way that’s concise and clear. And then I would say, lastly, the companies have to have a very clear knowledge of what they want to use the capital for. Our capital is expensive. We expect very good things from the companies that take our money, and what they have to do is understand what specifically are they going to do with the money, and how are they going to generate a return for that money. And that’s usually in terms of developing additional capabilities with the technology, as well as further building out their sales marketing efforts and growing globally. And so I think those are the key things that we look for when we look to put capital to work.

Moderator – Nisha Pillai:
Indeed. And capital is even more expensive right now, and that might indeed be why the investment in startups has been on the lower side this year. Thank you very much, Ken. So we’ve been hearing about AI, haven’t we? And the threats, cyber threats, posed by the burgeoning AI field right through the last couple of days. But what will the impact of AI have on cybersecurity startups themselves? That’s what I’d like to ask and get different perspectives from both Peter Sund and Shoaib Yusuf. So can I start with you, if you don’t mind, Peter? How will the continued growth, the AI everywhere world that we’re in now, affect cyber startups? Will they require even more?

Peter Sund:
capital? Well, thank you for a great question. Firstly, I am not convinced yet that AI is everywhere. I think AI is very high on the hype curve. That’s where it’s the biggest, I think. But of course, machine learning and automation and other things have existed in the industrial environment for a very long time. It just seems that the sort of public awareness and public access to certain type of AI systems is now creating this, a little bit of this hype. They are excellent. That, of course, is also a fact. So I think one aspect is clearly so that for smaller actors, these sort of general large language model-based AI systems and others, they can really help actually in the sort of general management issues of companies. They can increase productivity and so on and so on. But then the other side is, of course, the responsible use of AI. And as we know, there is very difficult to find technologies that would have not been misused. So it’s quite certain that AI will be misused as well. And it is already being misused. That is certainly true. And that’s also an opportunity for cyber security startups, isn’t it? Yeah, that is an opportunity. And maybe if I sort of take the other side of this, is that it’s highly likely that there will be a necessity for AI to sort of counter the bad AI. So it’s AI against AI, most likely in the cyber security field, in, let’s say, at least in midterm, I would say. Maybe not short-term yet,

Moderator – Nisha Pillai:
but midterm. Excellent, thank you. And Shoaib Yusuf, what’s your view on this? What’s the impact of the increasing penetration of AI into our lives going to be on the startup sector, cyber security startups? Thank you so much,

Shoaib Yousuf:
Nisha, for a fantastic question. Just building on of my fellow panelists, Peter, I have a slightly different view. I personally believe that AI is indeed everywhere. It is impacting pretty much all sort of industries. It is impacting how we actually look at things, how we actually perceive things. The sooner or better we identify that it also comes with a lot of opportunities for us, I will see those kind of industries, startups, and companies as the leaders. And the companies who are not able to kind of embrace AI and fully understand the opportunities it brings to the particular industry, I personally feel they will be more likely laggards. However, I see AI into two kind of categories. One is AI-centric products and AI-infused products. So AI-centric products are the perfect example of JetGPTs barred by Google. These are AI products. In these kind of things, which has given a phenomenal growth and a broader understanding of the potential of AI, what AI can do. However, AI- infused products, if you look at all kind of products out there, especially coming from the tech leaders, from Oracle to Salesforce to kind of Microsoft, everyone have started to infuse AI into their products. I personally believe this is not a choice. It’s must. All of our cybersecurity products eventually has to infuse AI to ensure that we fully unlock the potential of a lot of capabilities. If we won’t do it, we will be repeating the same mistakes because the AI tool as a tool is already available to all the bad guys out there. We need to infuse AI into our products. It will give us a scalability. It will give us operational efficiency. It will unlock the potential for us to generate new kind of insights, which we are not capable of fully able to deliver on.

Moderator – Nisha Pillai:
And is that a challenge or an opportunity for startups? It’s not clear to me listening.

Shoaib Yousuf:
It’s absolutely an opportunity. It’s absolutely an opportunity. However, the challenge is the scalability and the cost and the investment which is required. But if you look at 20 years ago, the cost of tech was quite high. And eventually, in the coming years, we will see with the hyperscalers investing where you see a lot of tech investments going on. Eventually, the GPU as a service over the cloud will become quite affordable for all the startup ecosystem to fully embrace and start innovating their products over that.

Moderator – Nisha Pillai:
I see you nodding your head there, Ken Pentamonte.

Kenneth Pentimonti:
Yeah, I would very much agree. I think there’s a huge opportunity that AI provides. I kind of look at three different opportunities within cybersecurity. One is just what was mentioned, leveraging AI to make the products, the services better, infusing that within many of our companies have already started a path toward leveraging AI in their products to make them faster, to make them easier to use, to make them more effective. Fantastic opportunity. Secondly, is leveraging AI to enhance what are very complex, huge data sets within the industry, especially as looking at threats and various different external attacks on networks. There’s a huge amount of data that needs to be sorted through and figured out in very quick time. AI is an incredible tool to better do that. I think lastly, AI itself. So the AI-based models, large organizations, governments are going to continue to use AI for various different purposes, non-cyber related purposes. But those AI models and the data that goes into those AI models needs to be secure. So that’s going to open up a whole new realm of cybersecurity technologies that secure those models and secure that data.

Moderator – Nisha Pillai:
A whole new specific application for it. So clearly there is national interest in having a burgeoning cybersecurity ecosystem of small and large companies. What role does government play then in supporting the smaller companies that may not really have got going yet and not standing on their feet independently? I’d like to start with a government perspective and ask the UK cybersecurity ambassador, what have you seen to be the most effective ways in supporting and directing and targeting support to small startups?

Juliette WilCox CMG:
Thank you. Well, we do have actually at least two direct and specific schemes that are pointed at helping startups work out what their ideas are, how they develop into something that’s a saleable product, how do they get mentored into creating a company that works, where do they find their potential customers, how do they face the idea of growing their financial capacity. And so we do that through, I mean, our NCSC actually specifically backs a program for startups. It gathers together people who, startups that are interested in solving very specific problems that governments have identified and then it will help them to grow into viable companies that can then become the sort of vehicle through which we solve some of our future problems. And that allows them to have those opportunities to meet in the UK and overseas partners, mentors and access to finance. We also do a scheme which we call a sort of cyber runway which is actually taking companies at all stages, which is so startups are absolutely there but there may be companies who are developing in other ways. Again, it provides them those opportunities to find access to markets they may be unsure of, how to get there, of mentorship and of managing money and developing business plans. But we know that without that it’s quite difficult. People are swimming around, not really being quite sure how to connect the dots. So being very, very specific about what your country is looking at in terms of its problem sets and then where you can intervene as a government to help with partners and they’re all with our industry partners that do this. It isn’t government that delivers this. That allows you to then have that network that’s built into the programme and allows them to sort of expand and find opportunities to develop and sometimes to fail. It helps them also to explore areas where they’re not going to be successful, places where they don’t think they want to develop, where they’re not good enough and need to employ different kinds of people in their company. So testing that through a sort of safe space of mentoring, I think, is incredibly important. It’s as useful as anything. Thank you, Juliette.

Moderator – Nisha Pillai:
So Piisatoin, you run the Finnish information security cluster. How do you see the role of government in supporting the smaller companies? Well, definitely.

Peter Sund:
For instance, those kinds of programmes and approaches that were just mentioned, as for example for UK, but there is also kind of the other side that sort of government instruments and support not leading to a situation where the government picks out the winners, the winning horses, so to say, that we have to be also careful on that because the market has to sort of live on the competition and so on. But the fact is that the smaller actors, they do need support because, especially when we talk about really novel sort of innovations and novel approaches, quite often these sort of key persons in these companies, they are not business specialists. They don’t have the networks, they don’t know exactly how to run businesses, they don’t know how to acquire funding and how to test and validate early enough of their sort of portfolio or the innovative idea, and hence we need all these multitude of supporting actors. That absolutely is correct in the sense, but I think more over, I think, for example, for Finland as our internal market is smaller than many others, quite often we wish to focus on the sort of international trade side. Indeed, it’s a necessity, isn’t it?

Moderator – Nisha Pillai:
Thank you, Peter. Shoab, over there, hello. I want to ask you about public-private partnerships at this point of the discussion. What’s the record like? Have they been effective? Have they delivered?

Shoaib Yousuf:
Nisha, this is a fantastic question and I think it all depends on quite a few variables that how you view public-private partnership. It depends on the economics and the national kind of, you know, how big is the market, what is the maturity of a particular country, how fragmented, how much kind of cybersecurity players are already there, how much is the demand. So there are quite a few variables which play a role in terms of public and private partnership. I personally believe that the countries who are quite behind in terms of their cybersecurity capacity to deliver on their supply needs, the government has to play a pivotal role in orchestrating the industry. They have to kind of play a role in bringing the private sector together. They have to kind of stimulate public-private partnership because doing that, it allows a lot of simulation in R&D. It allows a lot of incentivized, you know, programs for the private sector to look at cybersecurity differently. And most importantly, it also allows entrepreneurships to kind of like, you know, not only launch their startups and bring their innovative ideas forward, but it also have the government who is providing the support, much needed support for the technology transfers, for patenting, and many of these things are quite expensive. And public-private partnership plays a pivotal role in terms of stimulating that growth. So my short answer, Nisha, is it depends on the maturity of the country. It depends on what is this, you know, phase and what is the vision that countries see. Is the country really sees cybersecurity as one of their strategic priority? And if they see a lot of demand, government has to play a role and public-private partnership is the way to go.

Moderator – Nisha Pillai:
Thank you very much, Shoaib. So shall we end on a positive note, Excellencies, Ladies and Gentlemen? I’d like to ask Ken Pentamonte, can you share some positive examples of some success stories in this field with us?

Kenneth Pentimonti:
Yeah, sure. I think there are a whole bunch of great success stories. It was mentioned how many unicorns there are now in the cybersecurity sector. It’s great to see that the sector has really grown over the last handful of years and I think will continue to be a significant sector within the broader tech investing sector. I think there’s some really interesting ones. We talked about public- private partnerships. There’s an entity called In-Q-Tel in the United States that’s done a really good job of identifying innovative technologies that are now being used in the U.S. government. Juliet mentioned a number of programs that the U.K. government is sponsoring that have been fantastic. We’ve invested in a few of those companies coming out of those programs. Very, very helpful to get those companies up and going. We’re involved in a program in France called the Campus Cyber that’s a public-private partnership between the French government and various corporate sponsors. We’re involved in that. We’re a mentor and we get involved early stage, earlier than we would typically invest in companies, but we try to help them scale and get to a stage where they would be ready for our capital and in fact we’re in process of hopefully making an investment in the first company coming out of that program. So lots of great success stories. I think there’s huge opportunity for governments and corporate organizations to get together to help facilitate. It is very difficult for very early stage companies to get that initial funding, prove their products, and then be attractive to venture capitalists at a

Moderator – Nisha Pillai:
little bit later stage. On that note, we shall draw our conversation to a close. I’ve learned a huge amount from our discussion. Some of the struggles that small startups face, the ways in which government can help and why it’s so important, and what the national economic and defense payoff and benefits are for us all. Shall we join our hands to say thank you to our eminent speakers, Ken Pantuonti, Shoaib Yusuf, Her Excellency Juliet Wilcox, and Peter Thurmond. Thank you for joining us.