From Lab Coats to Hoodies
Ten years ago, if you talked about Homomorphic Encryption (FHE), you were likely standing in a university lecture hall. It was a theoretical curiosity—brilliant, but useless for business.
Today, the conversation has shifted to the boardrooms of Sand Hill Road. Venture Capitalists (VCs) are waking up to a massive opportunity. They realized that AI is the engine of the future, data is the fuel, but privacy is the brake. FHE is the technology that releases that brake.
We are witnessing a classic “Silicon Valley pivot”: The professors are becoming founders, and the academic papers are turning into pitch decks.
The “David vs. Goliath” Landscape
While tech giants like Google and Microsoft have been researching FHE for a decade (slowly baking it into their massive cloud empires), a nimble fleet of startups is moving much faster.
- Zama: This open-source champion is arguably the “face” of the movement right now. By making FHE accessible to non-cryptographers (as we discussed in our Developer Guide), they are positioning themselves as the “Red Hat” of privacy.
- Cornami & Chain Reaction: These companies aren’t fighting on software; they are fighting on silicon. They are betting that general-purpose chips will never be fast enough, so they are building the hardware specifically for encrypted math.
- Enveil: Focusing on the “Data in Use” problem, they are targeting the heavy hitters—government and intelligence agencies—proving that FHE is ready for mission-critical ops today.
Following the Money
Why is the smart money flowing here now? Because the “Unit Economic“ of privacy are changing.
Previously, encryption was a cost center—something you paid for to avoid fines. But in the AI era, privacy is a revenue enabler. If a hospital can monetize its patient data without exposing it, that data goes from being a liability to an asset.
VCs aren’t investing in FHE because they love math. They are investing because they see it as the infrastructure layer for the entire Data Economy. Just as Cisco built the plumbing for the Internet, these startups are building the plumbing for the “Private Internet.”
The Risk Factors
Of course, it’s not all smooth sailing. We are likely in a “hype cycle.” Valuations are high, and the technology is still maturing. Not every startup will survive the race to conquer latency. We will see consolidation—Big Tech will likely acquire the winners to integrate their tech into AWS or Azure.
But one thing is certain: The days of FHE being a “science project” are over. It is now a serious business, and the race to become the first “Privacy Unicorn” is officially on.