Cybersecurity startups raised a “record-shattering” $29.5 billion in venture capital last year, more than doubling the $12 billion raised in 2020 and outgunning the two previous years combined – According to a data released by Momentum Cyber, a financial advisory firm for the security industry.
Investors poured this envious amount of financing into more than 1,000 deals, of which 84 were greater than $100 million. This includes the $200 million Series D investment secured by industrial cybersecurity startup Dragos, Claroty’s $140 million pre-IPO raise and the $543 million Series A raised by passwordless authentication company Transmit Security. Total financing value was up 138% over the previous year, Momentum’s data reveals.
Cybersecurity startups are the big gainers amidst the pandemic
As a result of this milestone investment volume — which Momentum Cyber noted is driven by a spur of innovation in the industry and the pandemic-fueled explosion in cyber threats — a record number of security startups were minted as unicorns in 2021. More than 30 startups achieved $1 billion-plus valuations, including the likes of Wiz, Noname Security and LaceWork, compared to just six startups the previous year.
Furthermore, total M&A volume soared to over three times what it was in 2020, with $77.5 billion in deals in 2021 across 286 transactions. This is up from $19.7 billion in 2020 across 178 transactions. Momentum Cyber‘s s data shows over a dozen of these deals were valued at greater than $1 billion, including Advent’s $14.1 billion acquisition of McAfee, Proofpoint’s $12.3 billion acquisition by Thoma Bravo, Avast and NortonLifelock’s $8 billion merger and Auth0’s $6.4 billion acquisition by Okta.
6 Cybersecurity trends that Momentum Cyber finds promising
- Identity and Access Management (IAM) will continue its strong performance as perimeters continue to fade and we adopt more of a zero-trust approach to security – according to a momentum cyber report
- Hybrid cloud computing utilization will continue its rise and drive demand for cloud-agnostic solutions to address security, data protection, and compliance
- Data centric security solutions will continue their rise as data discovery, management, and protection extends security beyond today’s evaporating perimeters
- IoT devices will continue to be targeted given their low level of security and exponential growth into our homes, cars, medical devices, IT networks, OT networks and critical infrastructure
- A volatile stock market and expanding buyer universe will make later stage companies view M&A as an even more attractive alternative to an IPO, further increasing M&A deal volume
- Security services providers will continue to increase market share as more organizations elect to use managed solutions to alleviate vendor fatigue and the growing cybersecurity skills shortage
