Many VC's evaluating #FHE projects are focusing on scheme-level innovations, often seeking advancements at the FHE scheme level. I think this approach is fundamentally weak and impractical for both investor and startup. Here are a few of my thoughts on why:
1/ The frequent VC's question, "How much faster is your scheme compared to existing ones?" has driven many projects to claim they have the "fastest FHE solution" simply to meet investor expectations.
However, these claims often lack real value/evidence, as most of these projects have not published any research or undergone independent community review.
History shows that new (homomorphic) encryption schemes are often broken shortly after publication, and even well-established ones are continuously tested and challenged. Without thorough and long-term evaluation, the security and reliability of any encryption scheme remain uncertain.
2/ To be considered as the "fastest", an FHE (and not only FHE) scheme must first undergo wide community review to prove its security - a process that can take months or even years. Without security, performance alone is irrelevant.
3/ If a startup's primary advantage is solely an encryption scheme that is just *N* times faster than others without any other unique values, it will face direct competition from a numerous players including industry giants such as IBM, Samsung, Intel, Google, AWS, Microsoft. Competing with such well-resourced companies significantly reduces the chances of long-term success.
4/ To ensure long-term competitiveness, projects should consider FHE schemes as interchangeable tools rather than fixed dependencies. They must be designed with flexibility to seamlessly integrate future advancements and adapt to faster schemes, ensuring resilience and mitigating risks in an evolving cryptographic landscape.
5/ If an encryption scheme is truly effective, preventing others from using or replicating it is nearly impossible, especially in Web3 space. In cryptography, valuable ideas spread quickly, and patents offer little protection, as concepts can be easily adapted, making exclusive ownership unrealistic.
6/ A founder with a strong math background and FHE experience can easily create whitepapers with convincing “formal” proofs claiming their scheme is the fastest. Often, VCs don’t have the resources or expertise to fully verify these claims, making it hard to spot flaws or inconsistencies.
