The landscape of digital defense is undergoing a seismic shift, and the world’s most influential investors are betting billions that the traditional “human-in-the-loop” model of cybersecurity is officially obsolete. As anxieties surrounding AI safety and the potential for rogue autonomous agents hit a fever pitch, capital is flooding into a new generation of AI-native security startups at valuations that would have been considered impossible just three years ago.
Nowhere is this trend more visible than in the astronomical funding rounds of startups like Instinct and Simile. With Instinct securing $350 million at a $2.5 billion valuation and Simile banking $200 million, investors are clearly signaling that they are no longer waiting for long-term revenue milestones to prove a product’s worth. Instead, they are aggressively front-loading capital into any company capable of building an autonomous shield for an AI-first world.
One investor with a front-row seat to this transformation is Shardul Shah, a partner at Index Ventures. Having spent nearly two decades dissecting the enterprise software and cybersecurity sectors, Shah is widely regarded as a bellwether for the industry. His track record is underscored by his conviction in Wiz—a cloud security firm that became a cornerstone of the modern tech stack and was acquired by Google for a staggering $32 billion earlier this year.
Speaking on the latest episode of TechCrunch’s Equity podcast, Shah sat down with host Rebecca Bellan to explain why the old guard of security—characterized by manual oversight and periodic checks—is failing to hold back the tide. According to Shah, the sheer speed and complexity of AI agents mean that the “human-in-the-loop” approach is now inherently reactive and dangerously slow.
“The speed at which these systems operate has moved beyond human capacity,” Shah noted, justifying why Index Ventures continues to double down on AI-native security firms at stages that previously required years of historical data and proven market penetration. For venture capitalists, the risk of investing early in these unproven startups is now deemed lower than the risk of being left behind in a world where security must be as intelligent—and as fast—as the threats it aims to neutralize.
As the industry enters this high-stakes arms race, the message to founders is clear: in an AI-native economy, passive defense is a liability. The surge in funding reflects a broader industry consensus that security must be integrated into the architecture of AI itself, rather than bolted on as an afterthought.
To hear more of Shardul Shah’s insights on the future of the cybersecurity market and why the valuation boom is likely just the beginning, listeners can find the full episode of Equity on YouTube, Apple Podcasts, Spotify, or wherever they get their podcasts. Follow the show on X and Threads at @EquityPod for ongoing coverage of the evolving venture landscape.
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