Investors Are Betting Early On Cybersecurity Startups

In an increasingly digital world, startups, small businesses, and large corporations have at least one problem in common: ensuring the security of the data they store. We also know that security is top of mind for VCs, too—but likely more for the returns than the actual protection.

According to Scale Venture Partners’s 2018 cyber report, venture dollars invested in cybersecurity startups reached $5.4 billion last year, doubling from 2016 totals. The market also saw a number of exits in the space last year including Cisco’s $2.35 billion acquisition of Duo Security, and public debuts for Carbon Black, Okta, and Zscaler.

That investment activity has continued into Q1 2019, according to Crunchbase data.

More than $1 billion has been invested into cybersecurity companies located outside of China to date in 2019. That includes OneLogin’s $100 million comeback round in January 2019 (the company experienced a serious AWS breach in 2017). However, late-stage startups didn’t score all of the funding. In fact, more than 70 percent of deals in 2019 so far have been directed toward seed and early-stage startups, per Crunchbase.

To get a better handle on venture activity in the cybersecurity industry, Crunchbase News compiled a list of early-stage companies in the U.S. that picked up capital in Q1:

Industry incumbents like Check Point Software Technologies, Symantec, Palo Alto Networks, and FireEye were all early arrivals in the security space. So why the continued interest in cyber, and why do newcomers think they have a chance against industry behemoths? ScaleVP partner Ariel Tseitlin said the rise in early-stage activity is a result of the changing nature of the industry.

Source: Crunchbase

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