Cyber and AI: Pathway to Scale

The highlight of the evening was a fireside chat with Alastair Paterson, Founder of Digital Shadows and CEO & Co-Founder of Harmonic Security. Alastair shared his insights and strategies on entering, scaling, and succeeding in the U.S. 

US Market Entry Strategies and Challenges 

Paterson emphasised that entering the U.S. market is both a significant opportunity and a major challenge for UK and European cybersecurity startups. The U.S. offers access to the largest pool of potential customers and investors, but it also demands a high level of ambition, speed, and adaptability. He noted that U.S. investors typically expect much larger exits and are more focused on companies that have the potential to dominate their category.

Paterson stressed that to win in the U.S., companies must be prepared to invest heavily and raise sufficient capital to support their expansion. He also pointed out that hiring go-to-market talent in the U.S. is particularly expensive, and that companies should educate themselves and their stakeholders about these realities before making the leap. 

Differences in Investor Expectations and Mindset 

Paterson discussed the cultural and practical differences between UK and U.S. investors. U.S. venture capital funds are generally larger and require bigger exits to deliver returns, so they are less interested in moderate outcomes. In contrast, UK and European investors may be more open to smaller, niche successes but offer lower valuations and less capital. Paterson advised founders to be clear about their ambitions and to choose their investors accordingly, noting that the U.S. market rewards boldness and a willingness to accept failure as part of the journey. 

The Importance of Customer Engagement Over Investor Focus 

A recurring theme in Paterson’s remarks was the need for startups to prioritise customer engagement over investor attention, especially in the early stages. He observed that in Silicon Valley, potential customers are often deeply embedded in the startup ecosystem and are willing to act as design partners, providing valuable feedback and early adoption. In contrast, UK customers - particularly CISOs at large companies - tend to be more cautious and less supportive of local startups. Paterson argued that UK founders should work to build stronger relationships with domestic customers and encourage industry leaders to be more open to partnering with startups. 

Learning from the Israeli Cybersecurity Ecosystem 

Later in the discussion, Paterson reflected on the success of the Israeli cybersecurity ecosystem. He attributed much of Israel’s strength to its well-established bridge to the U.S., strong government and venture support, and a culture of experienced founders reinvesting in the next generation. Israeli startups benefit from early coaching, access to domestic and U.S. investors, and a network that helps them quickly secure landmark customers. Paterson suggested that while the UK lacks some of these structural advantages, it can still foster a more supportive and cyclical ecosystem by encouraging successful founders to mentor and invest in new startups. 

Adapting to the AI Era and New Operating Models 

Paterson also addressed how the rise of AI is transforming the way cybersecurity companies operate. He described how his current company is rethinking every function - from sales to product development - by leveraging AI tools to automate and personalise customer outreach, reducing the need for large teams and enabling faster iteration. He encouraged founders to consider how they would build their companies differently if starting from scratch in the AI era. 

Managing Investors and Board Dynamics 

Another challenge discussed was managing relationships with investors, especially when they sit on the board.

He shared personal experiences of both positive and negative board dynamics and emphasised that founders often have more power than they realise in shaping these relationships. 

Building a Stronger UK Cyber Ecosystem 

In closing, Paterson expressed optimism about the future of UK cybersecurity startups but stressed the need for greater ambition, stronger networks, and a willingness to learn from other ecosystems. He encouraged founders to focus on customer engagement, embrace the costs and challenges of U.S. expansion, and support one another to build a more vibrant and successful community. 

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