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Firm and Portfolio Updates February 2024

Inner Loop Capital is a pre-seed and seed venture capital fund investing at the frontier of Digital Infrastructure and AI. Inner Loop’s thesis is that the $600B+ Digital Infrastructure sector (Cybersecurity, Cloud Tech, and Data Science) is being simultaneously accelerated and disrupted by AI. Inner Loop is based in Baltimore, and the current portfolio spans from San Francisco to Israel. Inner Loop is currently investing out of a $30m-target Fund II. Inner Loop Capital is a solo-VC firm managed by Justin Label.

Firm and Community Updates

Welcome to the February 2024 newsletter for Inner Loop Capital. In February, we substantially refreshed some of the core messaging of the firm, bringing it in line with how our actual work has evolved in the past year.

Inner Loop has always described itself as a pre-seed and seed stage VC in Digital Infrastructure, defined as Cybersecurity, Cloud Technologies, and Data Science. If you have been following our AI-specific newsletter, Ad Interim: Provisional Thoughts on AI, then you have seen how the AI platform shift has become more and more central to our roadmaps over 2023, and more and more core to nearly every Digital Infrastructure founder’s vision for their company.

The evolution of my thinking on this can be summarized from a few pull quotes from the first three issues of Ad Interim.

Issue, DateQuotes from Ad Interim
#1, April 2023“AI tech that is generally available in the near term is going to change everything about the sectors and businesses I care about and invest in.”

“Inner Loop is now operating on the presumption that this is already a Platform Shift”
#2, October 2023“This will be a platform shift at least as big as mobile, roughly on par with the shift of software to the Cloud and surpassed in importance perhaps only by the Internet itself.”

“We are all AI VCs now.”
#3, February 2024“AI is driving a fifth major platform shift in enterprise computing that will be at least as profound as any other, and perhaps more so.”

“Tech that has been available for the last decade only to the Hyperscalers (Google, Alphabet, Facebook, Apple, Microsoft) will become as ubiquitous and as democratized as the Internet.”

“This will be the investment theme that drives Inner Loop Capital through the rest of my investing career.”

Given the reality of Inner Loop’s investment thesis and pipeline since early 2023, we have aligned our firm’s messaging with the work we are doing. To founders and LPs, we now describe Inner Loop’s work this way:

Inner Loop Capital is a pre-seed and seed venture capital fund investing at the frontier of Digital Infrastructure and AI. Inner Loop’s thesis is that the $600B+ Digital Infrastructure sector (Cybersecurity, Cloud Tech, and Data Science) is being simultaneously accelerated and disrupted by AI. Every subsector and every historic winner in Digital Infrastructure needs to be re-examined through the lens of AI, and entire new Digital Infrastructure categories are needed to support the ubiquitous deployment of AI.

If you are a founder operating at the frontier of Digital Infrastructure and AI, I would love to hear your vision and goals. I welcome referrals to such founders, as well as co-investors, builders, and the simply curious.

Portfolio and Industry News

Portfolio News

Congrats to Andrew Morris on landing his dream job as Founder & Chief Architect of GreyNoise Intelligence. Congrats to the entire GreyNoise team on landing Ash Devata as CEO.

Ash previously served as VP Products for Duo Security, through its $2.35 billion acquisition by Cisco, and later as the GM of the Zero Trust and Duo business inside of Cisco. It continues to be an honor to work with Andrew and GreyNoise since our 2019 investment, and I am thrilled to work with a leader as accomplished as Ash. The company announcement is here.

Consistent with the themes we have been developing around AI tools being an accelerant for certain security threats, Inner Loop portfolio company AppOmni highlights the potential risks associated with AI.

They cite the unintended consequences of connecting AI to sensitive data, and predict the continuation of mega breaches across various industries. AppOmni’s principal AI engineer and security researcher Joseph Thacker explores this theme further in an additional article in Forbes. For the trifecta, and highlighting Inner Loop’s thesis that new AI tools both drive new demand for Digital Infrastructure innovations and themselves propel those innovations, AppOmni released a new GenAI powered investigative interface for their product.

Congrats to DNSFilter founder Ken Carnesi on being named a Top 40 Under 40 by the Washington Business Journal. This is no surprise given the tremendous year DNSFilter racked up in 2023, including now serving over 32,000 customers.

Additionally, DNSFilter was named among the Top 10 AI Startups to Watch in 2024. If it seems surprising to see DNSFilter among household names like OpenAI and Perplexity, consider that this has really been at the heart of Inner Loop’s investment thesis since our founding. Application-level and Consumer Service names tend to be on the tip of tongue as tech innovators. But the Digital Infrastructure that powers these services is also constantly evolving and often more quietly builds highly valuable companies as well. Inner Loop’s investment process does not tend to put us in line to fund competitors to Google’s $2 trillion market cap. But the $5-50 billion valuation winners in Digital Infrastructure are more than sufficient to power return targets for our modest funds.

Both DNS Filter and GreyNoise released their annual incidents and research reports which are closely watched by the cybersecurity industry.

Digma was recognized by The New Stack as part of the “Observability Everywhere” trend. This is exactly the vision that Nir Shafrir and Roni Dover sold us on that led to our 2022 investment.

RunSafe’s Joe Saunders has been in the center of discussions about the very real threat that Chinese exploit campaigns pose for US critical infrastructure. He also speaks about how RunSafe’s approach is one of the few methods available to protect deployed software without (or until) rewriting it. CTO Shane Fry does an excellent job of explaining RunSafes key techniques in this new 5-minute video, accessible to non-technical audiences.

Congrats to Tall Poppy’s Leigh Honeywell on completing the Morgan Stanley Inclusive Venture Lab program and presenting at their Demo Day. Congrats as well for the appropriate recognition in Times Square!

Managed Cloud Detection and Response company Tamnoon has been shipping! Expanding from AWS, Tamnoon is now able to support customers in Azure and GCP as well. Tamnoon has also posted important new case studies around MTTR Reduction, noise reduction, and ROI on their new website. CEO Marina Segal moderated a GBI Roundtable and spoke on bringing AI-driven efficiency to cloud security with TFiR Media.

Ad Interim Addendum

This month’s section of Industry News has been renamed Ad Interim Addendum. Ad Interim: Provisional Thoughts on AI launched in April 2023 as the place to capture Inner Loop’s evolving approach to investing in the AI Platform Shift, and has come out roughly quarterly since. With AI now being squarely at the center of our work, and with the pace of change in the sector demanding far more than quarterly check-ins, these monthly sections of Ad Interim Addenda give us a chance to capture developments in the industry that are important to our thesis or have helped to evolve our thinking.

I have really enjoyed following Sarah Tavel’s thoughts on Selling Work, Not Software. These updated thoughts from January follow her original post from August 2023. I had the honor of working with Sarah at Bessemer before her turns at Pinterest, Greylock, and now Benchmark. I will sound like a broken record, but: Yes to the idea that LLMs will generate a whole new wave of technology revenue, and Yes to the need for an entire new stack of Digital Infrastructure to support the safe and efficient deployment of ubiquitous AI.

As is true with Sarah, one can also never have too much of BoldStart’s Ed Sim. Ed’s 2023 review and 2024 preview of Enterprise Tech (and AI) is a must read.

As everyone in the tech world knows, last week Nvidia posted perhaps the most important quarterly report in the history of financial markets. I apologize if this strikes you as a breathless overstatement, but simply consider that the resulting $277 billion market gain was the biggest single-day gain in history. Nvidia’s Q4 revenue was 33% higher than its full-year revenue for fiscal 2021.

Inner Loop’s multi-year funds invest in tiny companies that have large long-term ambitions. So quarterly reports change little about the trajectory or likelihood of success of our work. As such, this month’s Nvidia news that is more important to me is CEO Jensen Huang’s revised estimate that the world will spend $2 trillion over the next five years transitioning datacenters from CPU-centric to AI-efficient GPU-centric hardware.

A core part of Inner Loop’s Infrastructure 5.0 thesis is that this transition cannot occur in a software vacuum. The Digital Infrastructure innovators we have always seeked to back will increasingly utilize AI-first techniques to do their work and disrupt their target markets. Moreover, a whole new Digital Infrastructure stack will grow up around the GPU data centers and the AI-first applications they enable. These trends will accelerate and further disrupt the $660 billion Digital Infrastructure innovation opportunity that has always been at the center of Inner Loop’s work.

Archives and Please Be In Touch

Archives for both the Firm and Fund Updates (twice per quarter) and Ad Interim: Provisional Thoughts on AI (once per quarter) are available from the Inner Loop Capital website. Please visit to get caught up.

Now that you are up-to-date on all Inner Loop activities, please reach out any time. I welcome:

  • Discussions about any of the companies, technology sectors, or investment themes above
  • Introductions to founders or future founders in Digital Infrastructure, including Cybersecurity, Cloud Tech, DevOps, DevTools, Data Science, and AI
  • Connections to potential co-investors or collaborators in these sectors
  • And drop-ins to Baltimore (or the greater Washington D.C., area) any time

Do not hesitate to reach out if you see something or have ideas on ways we can collaborate more closely.

Justin Label
Managing Director
Inner Loop Capital

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