What to expect for cybersecurity investments in the end of the pandemic

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As we emerge from the global pandemic and return to robust economic growth, the cybersecurity industry is on fire and venture capitalists are taking note. While the industry has grown steadily over the past decade, since 2019, the expansion of the industry has accelerated at a breakneck pace. This is especially true when you take a look at the industry’s growth and investment in 2020 and the first quarter of 2021. We take a look at what’s driving demand, dive into the life of a cybersecurity startup, take a look at target markets, and analyze the horizon looking for signs of what’s going on. in reserve for the future.

What sparks the interest?

Major breaches continually grab the headlines, and security risks created by an increasingly remote workforce are driving businesses and individuals to rapidly ramp up spending on cybersecurity protections. In fact, research firm Gartner predicts cybersecurity spending will exceed $ 150 billion in 2021, a 12.4% increase from last year.

Where is the innovation happening?

This renewed interest in cybersecurity has led to the emergence of a wave of startups in this space, seeking to take advantage of this incredible opportunity. According to a Crunchbase report, 2020 has been a banner year for the cybersecurity industry with six new cybersecurity unicorns. Just a few months after 2021, we’ve already broken that record with nine new cybersecurity unicorns.

That same Crunchbase report also noted a record year for investment in the cybersecurity space in 2020 with $ 7.8 billion invested globally, nine times more than the industry saw just a short time ago. 10 years. This year is already on the verge of crushing the industry record investment of 2020.

Case Study: Dover Microsystems

Dover Microsystems is a prime example, a Waltham, Massachusetts-based cybersecurity startup led by co-founder Jothy Rosenberg.

With cybercrime estimated at $ 6 trillion in 2021, a business is likely to experience ransomware every 11 seconds. A global automaker recently spent $ 2.1 billion to respond to the hack that occurred during the demonstration of a new vehicle. Customers don’t know what to do, so they keep adding layers of defensive software, clogging their software stack and slowing down their products. This compounds the problem: the software has up to 50 bugs per 1000 lines of source code.

Dover believes that the only way to stop 95% of attacks that pass through the network is through silicon, where it cannot be diverted onto the network. The result is CoreGuard, a unique and disruptive solution to failing cybersecurity defense across all of our IT systems across all vertical market segments. It integrates with major processor architectures to monitor each instruction executed to ensure that it conforms to a defined set of security, safety, and privacy rules. If an instruction violates a rule, CoreGuard prevents it from executing and informs the host processor in real time of the exact offending line in the source code that was exploited.

Although formed over five years ago, Dover leveraged lean capital to develop a minimum viable product, sell multiple proofs of concept, and then begin commercial shipping. Going forward, Dover intends to sell in B2B as well as B2G spaces, which are markets that are expected to experience significant growth in the coming years.

Demand triggers for the cybersecurity market

What drives investors to invest money in the cybersecurity industry? There is an increase in demand for cybersecurity products due to several factors.

One of the main factors is today’s remote workforce. The pandemic has forced businesses to pivot as employees work from home, a trend that doesn’t appear to be going away anytime soon. With a remote workforce and sensitive data circulating in the cloud, there are serious security concerns. This has led to more cloud security startups looking to provide solutions for businesses looking for ways to protect their data. Gartner research has shown a 41% growth in end-user spending on cloud security between 2020 and 2021.

Companies are also processing more data than ever before, making it more attractive to hackers looking to steal that data or hold it for ransom. We are seeing an alarming number of data breaches and ransomware attacks facing US businesses. According to Risk Based Security, “The total number of compromised records in 2020 exceeded 37 billion, an increase of 141% from 2019 and by far the highest number of records exposed in a single year since we reported data breach activities ”. Already in 2021, we’ve seen high-profile breaches and ransomware attacks affecting the DC Police Department, Colonial Pipeline, and meat producer JBS, and there are sure to be plenty more to come in the second. semester.

Analyze the cybersecurity horizon

These factors have created an ideal environment for cybersecurity startups looking to offer their products, services and solutions to businesses and individuals requiring greater protection. Because demand is only increasing, investments in this area are also on the rise. The Crunchbase report highlighted the increase in transaction value over the past three years alone. In 2017, the average deal value was around $ 6.9 million. In 2020, that number jumped 73% to an average of $ 11.9 million per transaction. This shows a greater appetite for investment in this sector which is sure to grow.

With 2021 already on the verge of surpassing the 2020 record for cybersecurity spending and investment, this industry will be one to watch in the long term.

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