Cybersecurity startups are coming off record levels of funding in 2015, but have seen a slowdown in the first half of this year.
There are nine private cybersecurity companies in the CB Insights database that are valued at $1B or more, and of those unicorns, eight are located in California. The exception is Avast, which is located in Prague, Czech Republic (though the company advertises a “new Silicon Valley-inspired office.”)
We used CB Insights data and analytics to parse out cybersecurity deal and dollar shares by country and US states. Our analysis confirms that the US accounts for an outsize share of investments in cybersecurity companies compared to the next four countries: Israel, UK, Canada, and China, in that order. However, the US has seen a decreasing share of deals over the last few years compared to the rest of the world.
Deals and dollars remain US-focused
Looking at overall deal share over the past five years, markets beyond the US only represent 25% of all deals. Well behind the US’s 75% deal share, Israel is ranked second with 8%, followed by the UK at 4%, Canada at 2%, and China at 1%.
The remaining deals were widely dispersed, with no other country seeing more than 1% of the global total.
Cybersecurity companies based in the US took an even greater share of cybersecurity funding dollars at 86% of the global total.
US cybersecurity mega-rounds of $100M+ so far this year include a mix of companies: SaaS data center monitoring company LogicMonitor ($130M growth equity round); Mobi Magic, which develops Android security apps ($100M Series B); Cylance which applies AI algorithms to stop malware ($100M Series D); and Illumio that secures data centers and cloud infrastructure ($100M Series C).
Israel ranked second again in dollar terms, albeit with a lower dollar share at 5% compared to its deal share at 8%, indicating relatively smaller and earlier-stage rounds. Israel’s biggest investment rounds so far this year went to: LightCyber which offers behavioral attack detection (a $15.5M Series C financing); Indegy which provides security software for infrastructure like energy and water utilities ($12M Series A); as well as enSilo, which focuses on real-time data protection ($19M Series A: $10M in 2015 and a $9M Series A-II in 2016).
International deal share is ticking upward
The US continues to see a larger share of cybersecurity deals than the rest of the world, but the US share has fallen below 70% in 2016 year-to-date after rising as high as 81% in 2014. The rest of the world’s deal share rose 10 percentage points between 2014 and 2015, rising from 19% of cybersecurity deals in 2014 to 29% in 2015. In 2016 year-to-date, the rest of the world took 33% of deals.
California, Virginia, Massachusetts cybersecurity deals
California dominates US cybersecurity deal activity with 390 deals from 2012 to 2016 year-to-date, rising from 67 annual deals in 2012 to a peak of 104 in 2014. Virginia ranks ahead of Massachusetts in second place with nearly 80 cybersecurity deals since 2012; the state also peaked in 2014 with 26 deals.
Massachusetts is a close third at 73 deals since 2012. The state has edged out Virginia in the last two years, however.
Israel, UK, Canada, and China lead international growth
- Israel leads all international countries with 125 deals done since 2012. Israel’s cybersecurity deals grew 8-fold from 2012 to 2015.
- The UK ranks second with 85 deals since 2012. Deals dropped year-over-year in 2013 and 2014 and then jumped three-fold in 2015 (though still finished under Israel’s annual total). Notable UK cybersecurity deals in 2015 included: Avecto which specializes in endpoint security ($49M growth equity), Digital Shadows, a threat intelligence company ($8M Series A), and Darktrace which focused on behavioral cyber defense ($18M Series A). Notably, all three companies secured follow-on funding rounds in 2015 or 2016.
- Canada finished in third with 61 deals since 2012. Deal growth remained relatively flat with some growth from 2013 to 2014.
- China comes in a distant fourth with only 24 deals since 2012.
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