# Venture money piles into a few names as AI-found vulnerabilities spread past PHP

*By VC Tech Radar • October 23, 2026*

Modal's raise and the 20VC/SaaStr debate show how concentrated venture capital has become. OpenAI says finding and fixing bugs one at a time won't scale, while new incidents and investor appetite for security, AI-for-science and frontier companies all grow.

## Capital is going to fewer companies

The 20VC x SaaStr discussion described an unusually narrow market. Harry Stebbings met a profitable company with $20M ARR, growing 600–700% and with a strong team, and no VC responded [^1]. Rory O'Driscoll says space data centers and quantum are still getting money. The squeeze is on vertical software, where investors quietly fear AI erases the category [^1]. Jason Lemkin's tactical advice: founders with top-decile numbers outside hot categories should plan to meet 100 VCs [^1].

The panel also went through the math of funding at each stage:
- **Large funds:** $5B+ funds need billion-dollar positions, which makes a $2B outcome hard to use without majority ownership [^1].
- **Seed:** entry prices of $50–100M and multi-stage firms crowding allocations leave seed investors with stakes too small to matter [^1].
- **The counterview:** Rory cites history: 10–20 decacorns per decade, against a market behaving as if 90 will appear this year [^1].

**Inference vs. neoclouds.** Modal raised a $750M Series D led by Accel at $15.75B post-money and says it crossed $1B in annualized run rate. Its May Series C valued it at $4.65B [^1]. The CEO says sandboxes, which run AI-generated code, now make up about a third of revenue. Demand came from vibe-coding companies, background agents and RL work at new labs [^2]. Rory's argument: if quality is similar, cost-sensitive buyers like Replit will move tokens from a 70%-gross-margin lab to a 30%-margin inference host [^1]. Replit did switch its default model to OpenAI, which Lemkin attributes to prices 30–40% lower for similar quality [^1].

CoreWeave shows the other side. It fell 15.5% on October 14, some of its bonds yielded above 15%, and credit-default-swap spreads passed 1,000bp [^1].

**Anthropic.** Anthropic reportedly told prospective investors Q3 revenue was $16.8B, up from $11.6B in Q2. IPO talk reportedly centered on about $1.5T, below the ~$2T investors expected [^1].

**Late-stage multiples.** An Anduril employee tender implied about $90B on $2.2B of trailing revenue [^1]. Rory calls private multiples "almost certainly disconnected" [^1].

## Security: OpenAI says bug-by-bug fixing won't scale

Greg Brockman published OpenAI's account of PHP2Shell. The bug sat in PHP for 14 years. Calif researchers found a version using GPT-5.6 Sol in August, and OpenAI found a fuller version independently in September [^3]. He also mentions a Node.js RCE disclosed the same day. He calls the fixing process "slow and manual" and says it won't scale [^3]. He floats authorized defenders, such as government, scanning for vulnerable hosts and in extreme cases patching them remotely [^3]. Brockman says OpenAI moved 25% of its production engineers to model-driven hunting for holes in its own systems [^4].

The fallout widened this period:
- **Quest Diagnostics** was reported hacked, with patient data exposed. Quest serves roughly half of US hospitals and physicians [^5].
- **Replit** says it patched its infrastructure and blocked exploits after vulnerabilities in widely used third-party software [^6].
- **Jason Clinton** (Anthropic) told security leaders to ask their boards for funding for the basics, not AI, and to "hold on for ~18 months" [^7].
- **Nick Dobos** claims, without sourcing, that 3% of all recorded "critical" bugs were found in the past month [^8].

**CrowdStrike's view.** George Kurtz says attacker breakout time now averages 29 minutes and can be as fast as 27 seconds [^9]. He says much of the attacking runs on open-weight models, because frontier models refuse cyber requests [^9]. He claims a general remediation task costs about $0.03 on CrowdStrike's post-trained model versus about $10 on a top frontier cyber model [^9]. One bank CIO told him open-weight models a few months behind the frontier are "plenty" for most work [^9].

On the startup side, Cogent Security (CEO Vineet Edupuganti, formerly at Abnormal) has raised $53M, with Greylock and Bain Capital among its backers [^10].

**Agents in bank accounts.** Axios reports major US banks are finding third-party AI agents inside customer accounts and can't reliably tell humans from agents [^11]. David Sacks says most of this is customers handing their credentials to agents. He argues banks should support user-directed agents, with read-only access as an interim step [^12]. The open question is how to identify and permission agents.

## Frontier bets and new funds

- **a16z Frontier:** a16z renamed a16z Crypto to a16z Frontier and widened its mandate to companies building markets that may take years to develop [^13]. Named interests include AI-native uses, autonomous machines, bio, full-stack startups, and networks of agents that transact with each other [^13]. Chris Dixon leads it with Marc Andreessen, Ben Horowitz, Eddy Lazzarin and Guy Wuollet [^13]. Andreessen predicts startup formation will "skyrocket" because individuals are adopting AI faster than institutions [^14].
- **Warp Sciences:** raised a $215M Series A led by Lightspeed to apply AI and robotics to drug development. Co-founders are Kevin Weil, DJ Patil, FAIR co-founder Manohar Paluri and Sol Reisberg [^15]. The pitch is a US robotics-first CRO, a contract lab that runs experiments for biotechs. Its founders say US CROs cost 4–5x more than offshore ones, but offshore labs carry IP and geopolitical risk [^16].
- **AMI Labs:** a moderator restated details of Yann LeCun's company, a world-models bet against LLM scaling. It raised $1.03B in March at a $3.5B pre-money, described as Europe's largest pre-launch AI round [^17].
- **Tractian (YC W21):** raised a $130M Series D at $1.4B. It sells sensors plus AI for predicting industrial machine failures, has passed $100M ARR and is growing 90% a year [^18].
- **Robotics caution:** Jason Shuman says robotics venture funding is up over 400% in two years while installations grew less than 25% year over year [^19].

## How AI is changing incumbents

**Podium** says it crossed $150M in AI ARR in 2.5 years. Its first $150M business took eight years, and it had well over $100M in revenue when it chose to start over [^20]. It reports 20,000 agents working for customers, and says it is profitable and free-cash-flow positive [^20]. Paul Graham called it "founder mode": a hired CEO couldn't have abandoned the existing revenue [^21].

**Anthropic** says its merged code changes went from about 2,500 a day in May to over 30,000 in September. It now sees source control, builds and CI as the bottleneck [^22]. It built a closed-source source-control system (Scion) and a code-review tool (Antique) to replace Git and GitHub [^22]. Together with the panel's view that making AI-written code production-ready is software's most important category [^1], this points to developer infrastructure as an area to invest in.

**Getty Images** filed for Chapter 11, and public shareholders get nothing [^23]. Its active annual subscribers fell 25.2% to 240K, while editorial revenue grew 9.2% [^23]. That is one data point on generative AI eroding stock content while news coverage holds up.

## Briefly

- **Carbon-X:** Hugging Face's 14.8B open DNA-and-text model averages 66.7% on five DNA benchmarks, versus 67.5% for GPT-6.1 Sol. It fits on one 80GB GPU and is not clinically validated [^24].
- **OCRia-1:** LlamaIndex's document-parsing model claims top scores on ParseBench and three third-party benchmarks [^25].
- **Whop:** reportedly raised $200M at $5.1B, led by Sequoia, as it moves into payments [^26].

---

### Sources

[^1]: [20VC x SaaStr: $20M ARR and Unfundable, Anthropic’s $16.8B Quarter, and Modal at $15.75B](https://www.saastr.com/20vc-x-saastr-20m-arr-and-unfundable-anthropics-16-8b-quarter-and-modal-at-15-75b)
[^2]: [Why AI Compute Comes in Rectangles — Erik Bernhardsson, Modal CEO](https://www.latent.space/p/modal-d)
[^3]: [𝕏 article by @gdb](https://x.com/i/article/2112920540138844160)
[^4]: [𝕏 post by @a16z](https://x.com/a16z/status/2113404552439558377)
[^5]: [𝕏 post by @AndrewCurran_](https://x.com/AndrewCurran_/status/2113437710065311970)
[^6]: [𝕏 post by @Replit](https://x.com/Replit/status/2113472692892614996)
[^7]: [𝕏 post by @JasonDClinton](https://x.com/JasonDClinton/status/2113325263157395456)
[^8]: [𝕏 post by @NickADobos](https://x.com/NickADobos/status/2113430301183823901)
[^9]: [The New Apex Predator: CrowdStrike CEO George Kurtz on Adversaries Armed With AI Agents](https://www.youtube.com/watch?v=PST8yesYOSo)
[^10]: [Vineet Edupuganti \(Cogent Security\) - First Principles in the AI Era \[Entire Talk\]](https://www.youtube.com/watch?v=2kEkOX32gtY)
[^11]: [𝕏 post by @MadisonMills22](https://x.com/MadisonMills22/status/2113251043173683683)
[^12]: [𝕏 post by @DavidSacks](https://x.com/DavidSacks/status/2113317306398879787)
[^13]: [𝕏 article by @cdixon](https://x.com/i/article/2106118739963916288)
[^14]: [𝕏 post by @a16z](https://x.com/a16z/status/2113352287376785890)
[^15]: [𝕏 post by @kevinweil](https://x.com/kevinweil/status/2113294657673466060)
[^16]: [Science Is Limited by How Many Experiments Humans Can Run | Weil and Reisberg, Warp Sciences](https://www.youtube.com/watch?v=NJBs3ZMXr50)
[^17]: [Yann LeCun, AI legend, Co-Founder of AMI Labs, NYU Professor \[AI Founders Masterclass Session 5\]](https://www.youtube.com/watch?v=k4irc59yUsE)
[^18]: [𝕏 post by @ycombinator](https://x.com/ycombinator/status/2113311068516937811)
[^19]: [𝕏 post by @JasonrShuman](https://x.com/JasonrShuman/status/2113274944935391487)
[^20]: [𝕏 post by @ericwilliamrea](https://x.com/ericwilliamrea/status/2113265406316044777)
[^21]: [𝕏 post by @paulg](https://x.com/paulg/status/2113285100636979593)
[^22]: [The Pulse: Anthropic builds its own source control system](https://blog.pragmaticengineer.com/the-pulse-anthropic-builds-its-own-source-control-system)
[^23]: [Getty Images Files for Chapter 11 at a ~$910M Run-Rate: 27% EBITDA Margins, 25% Fewer Subscribers, and $0 for Public Shareholders](https://www.saastr.com/getty-images-files-for-chapter-11-at-a-910m-run-rate-27-ebitda-margins-25-fewer-subscribers-and-0-for-public-shareholders)
[^24]: [r/MachineLearning post by u/jatingargiitk](https://www.reddit.com/r/MachineLearning/comments/1xchayq/)
[^25]: [𝕏 post by @jerryjliu0](https://x.com/jerryjliu0/status/2113291928292790725)
[^26]: [r/SaaS post by u/Putrid_Meal_3231](https://www.reddit.com/r/SaaS/comments/1xcvte5/)