Cybersecurity · Industry brief

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Vermilion Cliffs Ventures, led by solo general partner Ashley Smith, closed a $25 million Fund II focused on AI infrastructure and cybersecurity startups. The fund closure demonstrates continued LP appetite for focused micro-VCs despite cautious broader venture markets, with Smith positioning the fund to write initial checks of $500,000 to $2 million in pre-seed and seed rounds. The timing capitalizes on enterprise budget allocations to AI transformation and intensifying security spending driven by regulatory pressure and breach concerns.

The Department of Health and Human Services has postponed the final HIPAA Security Rule update from May 2026 to July 2027, according to the U.S. Office of Management and Budget website. The proposed rule, published in the Federal Register on January 6, 2025, includes substantial mandatory cybersecurity requirements such as encryption, multifactor authentication, network segmentation, annual penetration tests, and vulnerability scans every 6 months. The HHS Office for Civil Rights received nearly 5,000 comments on the proposed rule, with hospitals, health systems, and industry groups expressing concerns about implementation feasibility, citing a projected one-year industry compliance cost of $9 billion with annual costs of $6 billion for subsequent years, particularly affecting small and rural healthcare providers (HIPAAJournal.com, citing OMB website and Federal Register filings).