Funding To Cybersecurity Startups Dips Amid Market Turmoil

Funding To Cybersecurity Startups Dips Amid Market Turmoil

Funding for risk-backed cybersecurity companies during the second quarter remained high, but there are indications that it is vulnerable to the slowdown in venture capital.

Global funding for the second quarter was less than $ 4 billion, the first time the figure has dropped so low since the fourth quarter of 2020, when it reached $ 2.82 billion. according to Crunchbase data.

“It’s not hard to predict that we’ll see any kind of slowdown,” he said Stephen Wardmanaging director of Insight Partners who invests in cybersecurity.

The flow of deals also appeared to be slowing, with only 170 bids announced in the quarter just ended, the lowest figure since the third quarter of last year, according to Crunchbase.

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However, while a decline is noticeable, it is also too early to say that the sky is falling. The first half of this year basically coincided with the first half of last year in terms of financing (between $ 9.8 billion and $ 9.9 billion) and several companies were able to raise large tranches of cash only during the second quarter. Some of these major offerings include:

There were also more than a dozen unicorns coined in space during the first half of the year, including CertiK, Nord Security i Illa, according to Crunchbase.

Slight deceleration

However, it seems to indicate a slight decline compared to last year maximum of all time for funding, when more than $ 20 billion was poured into space.

Ward said the slowdown, however, comes not only from the investment side but also from the start-up side, as founders are taking a step back and re-evaluating fundraising in the current market.

He also said he is having more “exploratory conversations” with the founders, reviewing different options on how best to advance a business and whether that should include fundraising or not.

Dino Boukourisfounding director of the San Francisco-based financial advisory firm Cyber ​​Momentum, said it is always important to have a broader view of the investment environment. Venture companies are still raising funds of good size, such as YL Venturesrecent $ 400 million security seed fund, and capital is still flowing into the security sector.

“This leaves me optimistic that there will not be such a significant slowdown in the security sector, and also softer headwinds for companies in the earlier phase,” Boukouris said.

“For seed companies, I hope the impact will be even smoother, as the more space there is between a company and public markets, the less we expect them to be affected by the turmoil in the public market,” he added. .

The future

Others also remain optimistic about investing in cybersecurity, and many call the sector “resilient,” as its importance only seems to grow. The rise in ransomware attacks, hackers and global events such as the Ukraine / Russia conflict has only given a brighter, and much hotter, view of the sector, investors say.

Ward said he also expects to see strong investment around repair technologies, especially as it applies to both DevOps and cloud security.

While funding may not be at the highest levels of 2021, Ward added, it is still strong compared to other years and certainly where the sector was even just a decade ago.

“With the technology we have now, I’m as optimistic about innovation as I was three or four months ago,” he said.


Cybersecurity is defined by the network security, cloud security, and cybersecurity industries, according to Crunchbase data. Most of the announced rounds are represented in the database; however, there could be a slight delay for the reported rounds at the end of the quarter.

Illustration: Dom Guzman

Stay up to date with the latest rounds of funding, acquisitions and more with Crunchbase Daily.

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