(This article has been updated.)

Last month, a principal software engineer at Microsoft caught a “backdoor” attack on open-source software supply chains widely used by tech companies, cloud computing services and even government entities. Shortly after that, software security startup Binarly announced a $10.5 million seed round, funding its development of an AI tool designed to flag such security problems.

The company, which is based in Santa Monica, said it oversubscribed its seed round led by Two Bear Capital, with equity investments from the venture arm of software giant Cisco, Canaan Partners and Liquid 2 Ventures.

Founded in 2021 by Nvidia alum Alex Matrosov, the company’s flagship product claims to automate the discovery of supply chain weak spots and sniff out signs of malicious code. Binarly argues the traditional method of constantly updating virus databases can’t keep up with malware, which encrypts or metamorphizes itself in attacks.

“We built the Binarly Transparency Platform to address that industry gap and provide verifiability and inspectability at every corner of the software and firmware supply chains,” Matrosov said. “The caliber of investors in our seed round is a loud signal that we’re progressing towards that vision.”

“Cyber attacks on firmware are increasing exponentially due to inadequate security controls at the firmware layer,” said Janey Hoe, vice president of Cisco Investments. “Binarly offers a unique solution to detect both known and unknown firmware threats.”

McKinsey & Co. estimated a $2 trillion market opportunity to meet the cost of cyberattacks, a giant source of income for an industry currently standing at $208 billion in size.

Binarly’s valuation wasn’t disclosed in the fundraising, but since Crunchbase reports a $2.5 million average for recent seed rounds, the $10 million brought in by Binarly hints investors see major growth opportunity for the company. Binarly said it would use this money to further expand its engineering team and scale enterprise operations.