Investments in cybersecurity startups more than doubled in the first half of 2021

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The pandemic has had a major impact on cybersecurity. Cybercrime now costs the world nearly $ 600 billion each year, according to Intelligence of Mordor – equivalent to almost 0.8% of world GDP. Meanwhile, the World Economic Forum It reports that the probability of identifying and prosecuting cyber attackers in the US has dropped to a pitiful 0.05%.

Perhaps that is why cybersecurity venture capital (VC) financing more than doubled from year to year during the first half of 2021, while the total number of mergers and acquisitions (M&A) in the sector multiplied by more than four. A new report from AllegisCyber ​​Capital, Momentum Cyber ​​and NightDragon finds that investors invested $ 11.5 billion in total venture capital financing in the first half of 2021, up from $ 4.7 billion in the first half of 2020, and that mergers and acquisitions increased from $ 9.8 billion in 93 transactions to $ 39.5 billion in 163 transactions during the same period.

“As an investor in the cyber market for over fifteen years, I can say that this market climate is unlike anything we have seen to date,” said AllegisCyber ​​Capital founder and managing director Bob Ackerman in a release. “The market is poised for action to make a significant shift in the threat landscape and fuel the continued growth in the capabilities of our nation’s organizations to defend the technology infrastructure that powers our economy.”

Of the 430 investments in cybersecurity startups in the first half of 2021, 36 exceeded $ 100 million in value. By contrast, on the M&A side, nine deals exceeded $ 1 billion, including the acquisition of Proofpoint for $ 12.3 billion by Thoma Bravo, the acquisition of Auth0 for 6.4 billion by Okta, and the acquisition of McAfee for 4,000 million by STG.

The largest investment deals were for cloud security, security consulting, and risk and compliance companies. The top M&A categories were data security, network and infrastructure security, incident response, and threat intelligence.

“We are seeing a perfect storm of factors coming together to create the most aggressive threat landscape ever for commercial and government organizations around the world,” NightDragon founder and managing director Dave DeWalt said in a statement from press.

Continuous momentum

The deal’s momentum is likely to accelerate as hackers target digital startups. The ransomware has increased 148% year-over-year with an estimated 2.9 million attacks so far in 2021, and the European Union Cybersecurity Agency (ENISA) recently predicted a fourfold increase in supply chain attacks in 2021 compared to last year. High-profile incidents such as the Colonial Pipeline closure, JBS supply chain disruptions, and compromised SolarWinds and Microsoft Exchange servers could drive spending on global information security and risk management technologies for $ 150 billion this year, an increase of 12.4%.

“During the first half of 2021, we have witnessed unprecedented strategic activity with M&A and financing volumes at record highs. We expect this trend to continue through the rest of the year and into 2022, ”said Eric McAlpine and Michael Tedesco, managing partners of Momentum Cyber.


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