When ChatGPT launched in November 2022, a few thoughts ran through Evan Reiser’s mind. “It’s way better than I thought, and this is gonna be amazing for the world,” and, then, “Oh, my God, the bad guys are going to get this too,” he recalls. Reiser cofounded his startup, Abnormal Security, in 2018 with Sanjay Jeyakumar to help detect and prevent email cyber attacks. The company uses A.I. and machine learning for behavioral profiling, analyzing data from company platforms like Slack to help spot socially-engineered email scams and determine whether it was sent by an actual employee, or by a hacker posing as one. But the explosion in popularity of ChatGPT and other chatbots has vastly increased the sophistication of email attacks, he says—and people are greatly underestimating the power of the technology. The bad news? “Right now, I think the defenders are at a disadvantage,” and it’s likely that A.I.-generated cyber attacks will push cybersecurity “in the wrong direction for a year or two until we catch up,” Reiser says. But he believes that eventually, “defensive” A.I.—that is, A.I. used to protect companies—will come out the ultimate victor. “You will need A.I. to fight A.I. in the future. I know it sounds a little cheesy, [but] the reason I think that defender A.I. will be superior is because it’s going to have a data advantage,” he argues. Reiser notes that cyber attackers using A.I. have only publicly-available data, while A.I. defenders have that same public data, plus troves of internal private data from companies themselves (like emails and workflows and customer relationships). Of course, as the CEO of a cybersecurity startup, Reiser is optimistic: “I think we’ll actually be in a better state 10 years from now than we are today.” Abnormal Security recently released CheckGPT, a tool that enables companies to determine whether a suspicious email was written using generative A.I. tools like ChatGPT. Reiser says the company currently isn’t planning on raising more funding. The startup was last valued at $4 billion in early 2022, with big VC backers including Greylock Partners, Insight Partners, and Menlo Ventures (the firm raised an undisclosed amount of funding from CrowdStrike Holdings in March of this year). Abnormal is still dwarfed by buzzy cloud security startup Wiz, which focuses on protecting companies’ infrastructure in the cloud, and is valued at over $10 billion, with $200 million in sales. Reiser says Abnormal and Wiz have “talked about, ‘Hey, what’s working for you?’ We’ve tried to trade notes.” (The company later said Wiz is not a competitor.) As for Abnormal, the firm just announced they hit $100 million in annual recurring revenue. Reiser says that the company is intentionally not profitable right now to focus on investing in products, but that they could become profitable “in a quarter or two, if we decided to.” When I asked Reiser if announcing the ARR figure was a precursor to an IPO (something they’ve teased before), he was coy, but said that they could go public in a couple of quarters, or wait a couple of years, emphasizing there wasn’t urgency. He said the company would likely want to be profitable before they listed. Abnormal and other such A.I. companies are facing a dilemma: A.I. technology is improving at such breakneck speed that startups are essentially always behind. For all our companies’ sakes, we can only hope that Reiser is right, and that the forces of good A.I. catch up. Real estate startup acquisition buzz…Beleaguered real estate investment firm Cadre, cofounded by Ryan Williams and Jared and Josh Kushner, is reportedly in talks to be acquired at a clearance-price valuation. According to The Information, Cadre, which in 2017 was valued at $800 million by investors including Andreessen Horowitz and Thrive Capital, is nearing a deal with alternative investment platform Yieldstreet to be acquired at what could be around a $100 million valuation (Axios reports the deal is too speculative for a firm valuation yet). Cadre didn’t respond to my request for comment. It’s another example of the struggles that proptech—and, in general, highly-valued—startups are facing as both the interest rate and commercial real estate environments have changed. Programming note…By the time you read this, I’ll be heading off for a week-long vacation. As always, please send deals to termsheet@fortune.com. See you in a week!Cheers,Anne SradersTwitter: @AnneSradersEmail: anne.sraders@fortune.comSubmit a deal for the Term Sheet newsletter here.Jackson Fordyce and Joey Abrams curated the deals section of today’s newsletter.VENTURE DEALS- TechMet, a Dublin-based critical minerals investment company, raised $200 million in funding. The U.S. International Development Finance Corporation, Mercuria Energy, Lansdowne Partners, and S2G Ventures invested in the round.- ClassWallet, a Hollywood, Fla.-based digital wallet-based purchasing and reimbursement platform for public funds, raised $95 million in funding. Guidepost Growth Equity led the round and was joined by Education Growth Partners and Lazard Family Office Partners.- Aether, a Menlo Park, Calif.-based rare metals extraction company, raised $49 million in Series A funding co-led by Natural Capital’s Jay Zaveri and Unless’ Trevor Zimmerman. - Voiceflow, a San Francisco- and Toronto-based collaboration platform for building A.I. agents, raised $15 million in funding led by OpenView. - Doc2Doc Lending, an Atlanta-based personal lending platform for physicians and dentists, raised $10 million in funding. Professional Solutions and others invested in the round.- Demex, a Washington, D.C.-based risk transfer technology provider for climate and weather risk, raised $5 million in funding led by Blue Bear Capital.- SureIn, a Berlin-based insurance company for SMB, raised €4 million ($4.38 million) in seed funding led by Pact VC.- basys.ai, a Cambridge, Mass.-based health care technology company, raised $2.4 million in funding. Nina Capital led the round and was joined by Eli Lilly & Co., Mayo Clinic, Two Lanterns Venture Fund, Asset Management Ventures, and Chaac Ventures.- Whitebalance, a Washington, D.C.-based copyright issues platform for live entertainment, raised $1.5 million in funding. Dundee Venture Capital led the round and was joined by Bread and Butter Ventures and Techstars. - DeckMatch, an Oslo-based inbound startup pitch evaluation platform for VCs, raised €1 million ($1.09 million) in pre-seed funding co-led by Alliance VC and Skyfall Ventures. PRIVATE EQUITY- Bain Capital Private Equity agreed to acquire Fogo de Chão, a Dallas-based restaurant brand. Financial terms were not disclosed.- BV Investment Partners acquired a majority stake in Hardenbergh Group, a Livonia, Mich.-based provider of medical service professionals and other non-clinical roles. Financial terms were not disclosed.- Forward Solutions, an Osceola Capital portfolio company, acquired ElectroRep, an Irvine, Calif.-based electrical industry sales, marketing, and service provider, R/B Sales Corporation, a Hiawatha, Iowa-based sales representative service provider, Madigan McCune & Associates, an Orlando, Fla.-based manufacturers representative for the telecommunications industry, and Upper Midwest Utility Sales, a Maple Lake, Minn.-based power utility and outside plant manufacturing representative. Financial terms were not disclosed.- SSI Strategy, backed by Amulet Capital Partners, agreed to acquire NDA Group, an Upplands Väsby, a Sweden-based affairs and drug development consultancy. Financial terms were not disclosed.- TradePending, backed by Capstreet, acquired Snapcell, a Tampa-based SaaS automotive video marketing platform. Financial terms were not disclosed.OTHER- Definitive Healthcare acquired Populi, a Farmington, Conn.-based healthcare commercial intelligence company, for $52 million.- Ariela & Associates International acquired Parade, a New York-based intimates brand. Financial terms were not disclosed.- ElectraMeccanica, a Mesa, Ariz.-based electric vehicles company, and Tevva, a London-based electric medium- and heavy-duty commercial vehicles provider, agreed to a merger. Financial terms were not disclosed. SPAC- LatAm Logistic Properties, a San Juan, Costa Rica-based distribution warehouse owner and operator, agreed to go public via a merger with Two, a SPAC. The deal values the combined business at about $578 million including debt.- One Energy Enterprises, a Findlay, Ohio-based renewable power company, agreed to go public via a merger with TortoiseEcofin Acquisition Corp. III, a SPAC. The deal is valued at $300 million.PEOPLE- MaC Venture Capital, a Los Angeles-based venture capital firm, hired Jennifer Randle as COO. Formerly, she was with The Chernin Group.Correction, Aug. 16, 2023: The online version of this newsletter has been updated to correct that LatAm Logistic Properties is located in Costa Rica.
