The Cyber Security Investment Boom Continues

Despite big economic problems elsewhere, 2020 and 2021 were very good years for the cyber security industry, with 178 strategic merger and acquisition (M&A) deals in 2020, and 223 deals in the first three quarters of 2021 alone. 

Venture capital financing for cyber security firms has also been very high, resulting in a number of 'unicorns' - a company with an investment valuation of more than one billion dollars

According to Progress Partners’ Market Report: Cybersecurity Q1 2022, M&A activity leapt from $27.5 billion in 2020 to $70.4 billion in 2021 and by the end of the first quarter of 2022, it had reached almost $27 billion, on track to exceed previous years.

In the first quarter of 2022 has been remarkable for the high number of cyber security M&A transactions and right now deals are mostly being driven by large corporations in telecoms, aerospace and energy acquiring cyber security technology to strengthen their core operations. 

Larger firms are looking to expand their capabilities. 

  • Recorded Future’s recent acquisition of SecurityTrails is one example, adding attack surface monitoring technology to Recorded Future’s existing capabilities.

However,  the latest M&A figures suggest  a levelling  off for the full year 2022 and sources suggest that while M&A activity will continue, access to VC financing may become more difficult as investors respond to a number of risk factors: 

  • The COVID-induced work from home (WFH) and the new hybrid working paradigm have dramatically increased companies’ threat surfaces.
  • Governments worldwide are applying pressure through increased mandatory cyber security regulations.

While demand for cyber security products will remain high and the finance to support new and existing security companies is available, the pace of investment funding may slow over the next few months, due to these perceived risk factors.

The implication is that the money is still available, but that it will be harder for the new and unproven startups to access it because the investors are becoming more risk-averse.

Part of VC investors’ caution might  be because there has been too much money chasing a simple investment formula - buy private companies, to take them public and sell them to others - risking 'dumb deals'. The rest of 2022, activity is more likely to focus on M&A that consolidates proven technologies rather than betting heavily on new ones. Getting startup funding will become more difficult for the rest of 2022.

As new cyber security threats emerge, new companies with new technologies will be created to combat those threats. The fundamental growth in the sector will ensure that startups will be funded and incumbent players will continue to acquire fresh security technologies and talent via M&A. 

As things stand after Q1 2022, M&A activity will continue, but investment growth financing will be at a more cautious level. 

Progress Partners:   ARN      Forbes:    Security Week:    TechAdvisor:   Dark Reading:  

You Might Also Read: 

Software Industry Mergers and Acquisitions 2022:

 

« Special Measures To Deal With Quantum Technology
Some Apps Come Loaded With Malware »

CyberSecurity Jobsite
Perimeter 81

Directory of Suppliers

Practice Labs

Practice Labs

Practice Labs is an IT competency hub, where live-lab environments give access to real equipment for hands-on practice of essential cybersecurity skills.

DigitalStakeout

DigitalStakeout

DigitalStakeout enables cyber security professionals to reduce cyber risk to their organization with proactive security solutions, providing immediate improvement in security posture and ROI.

ZenGRC

ZenGRC

ZenGRC - the first, easy-to-use, enterprise-grade information security solution for compliance and risk management - offers businesses efficient control tracking, testing, and enforcement.

Resecurity, Inc.

Resecurity, Inc.

Resecurity is a cybersecurity company that delivers a unified platform for endpoint protection, risk management, and cyber threat intelligence.

Jooble

Jooble

Jooble is a job search aggregator operating in 71 countries worldwide. We simplify the job search process by displaying active job ads from major job boards and career sites across the internet.

IT Governance

IT Governance

IT Governance is a leading global provider of information security solutions. Download our free guide and find out how ISO 27001 can help protect your organisation's information.

CSI Consulting Services

CSI Consulting Services

Get Advice From The Experts: * Training * Penetration Testing * Data Governance * GDPR Compliance. Connecting you to the best in the business.

LockLizard

LockLizard

Locklizard provides PDF DRM software that protects PDF documents from unauthorized access and misuse. Share and sell documents securely - prevent document leakage, sharing and piracy.

XYPRO Technology

XYPRO Technology

XYPRO is the market leader in HPE Non-Stop Security, Risk Management and Compliance.

Ascentor

Ascentor

Ascentor helps organisations stay safe through information risk management. Our customers rely on our pragmatic and business focused approach to cyber security and information assurance challenges.

Allen & Overy

Allen & Overy

Allen & Overy is an international law firm. Practice areas include Telecommunications, Media and Technology.

Raz-Lee Security

Raz-Lee Security

Raz-Lee Security is the leading security solution provider for IBM Power i, otherwise known as iSeries or AS/400 servers.

CERT-PH

CERT-PH

CERT-PH is the National Computer Emergency Response Team and the highest body for cybersecurity related activities in the Philippines.

Bio-Morphis

Bio-Morphis

Bio-Morphis Reflex solution is a paradigm shift in the approach to information systems security.

Cloudentity

Cloudentity

Cloudentity combines Identity for all things with API and Application security in a unique deployment model, combining cloud-transformation and legacy systems.

X-Ways Software Technology

X-Ways Software Technology

X-Ways provide software for computer forensics, electronic discovery, data recovery, low-level data processing, and IT security.

Stratosphere Networks

Stratosphere Networks

Stratosphere Networks offer managed cybersecurity services rooted in Managed Detection and Response and Security Operations Center services that our team can tailor to meet your needs.

Digital Pathways

Digital Pathways

Digital Pathways is an award-winning data security provider that helps businesses protect their digital assets.