Back

Insights

Feb 03, 2020

Is Cybersec Still under VC Radar?

Close to $10b was invested in privacy and cybersecurity (cybersec) companies in 2019, which is 11% more than in 2018. The increase was observed in late-stage financing (series C+) while seed and early-stage financing were at a similar level as in 2018.

As compared to the beginning of the decade cybersec deals value increased ca. 5x from $1.7b in 2010. The largest rounds in 2019 amounted between $200-300m (KnowBe4, Rubrik, 1Password, OneTrust).

The most active locations for cybersec deals were the US, Israel, China, Great Britain, and Canada. The total value of exits from venture-backed privacy and security companies amounted to $4.8b. The largest exit was the acquisition of Shape Security for $1b followed by the acquisition of Recorded Future for $780m.

Cybersecurity trends in 2020. It is expected the strongest cybersecurity trends in 2020 will be:

1) Intensification of ‘Cyber Cold War’

A cyber ‘cold war’ is taking place online as Western and Eastern countries increasingly separate their technologies and intelligence. The ongoing trade quarrels between the US and China and the gradual separation of these two big economies are an indicator.

2) The Rise of Artificial Intelligence (AI)

As AI is more and more often utilized as a proxy for crime, it will also be used to accelerate security responses. Currently, most security solutions are based on detection engines built on human-made logic, but it is getting harder to keep this working well based on this approach. AI should substantially accelerate the identification of new threats and responses to them.

3) “Means of Communication” are Increasing as the Target of Attacks

Connectivity creates a new combat area. In the first half of 2019, there was a 50% increase in mobile banking malware compared with the previous year. As every communication channel will be used most frequently, each of the channels will become a more popular attack surface.

4) Vulnerability Levels are Constantly Increasing 

5G development and its’ usage in IoT devices increase the vulnerability and the use of connected devices will accelerate substantially increasing networks’ vulnerability to large scale, multi-vector cyberattacks. IoT devices and their connections to networks and clouds seem to still be a weak link. A growing volume of personal data will need securing against breaches and theft.

5) Enterprises will need to address their cloud approach

Detection seems to be no longer enough to ensure protection, and prevention is now crucial. Organizations perform a majority of their workloads in the cloud environment, but the level of understanding about security in the cloud remains low; it is often an afterthought in cloud deployments. Security solutions need to evolve to new, flexible, cloud-based architectures that deliver scalable protection.

 

Leszek Orłowski

Investment Director @ bValue VC

Leszek Orłowski has many years of experience both as an advisor and investor. He advised multiple startups, as well as the largest companies in Poland. He has hands-on experience in crafting market entry strategies, search for strategic investors and commercialization. He is also an expert within corporate finance, M&A, financial restructuring.