A litany of high profile security breaches of corporations and governments have made cybersecurity startups an increasingly hot area for investment. We used CB Insights data to analyze cybersecurity financing trends and some of the most active investors in the space.
Related brief: Guest by Lucas Nelson of Gotham Ventures on the 4 themes transforming cybersecurity
Cybersecurity Deals and Dollars
In the last 5 years, $7.3B has been invested into 1208 private cybersecurity startups. Since 2010, deals and dollars increased steadily growing by more than 100% in both areas during this time period. Funding in 2014 broke the $2B barrier for the first time while deals continued their steady ascent growing to 269 deals.
On a quarterly basis, we see that Q2 and Q3 of 2014 were the strongest for investment, with both reaching over $700M dollars invested. Large deals during this time include a $150M investment into Lookout as well as multiple rounds totaling over $180M into Good Technology. Deals hit a peak in Q4’13 and Q1’14 with 73 deals in both quarters.
Cybersecurity Startup Financing by Series
Series A deal share exploded in 2014 growing by 13% between 2013 and 2014. Conversely, Seed rounds decreased significantly, reaching a 5 year low and taking a bit more than a quarter of total deals. Series D deal share has decreased consistently over the last 4 years, taking only 1% in 2014. Some Series A deals in 2014 include investments in BitGo and ZeroFOX.
Dollars were relatively evenly divided across these series, with the exception of Seed and Series D deals, which took 3% of dollars. Seed is expected given those are generally smaller deals in terms of size, but the Series D drop off is a bit less expected given those should be among the more sizable deals that are happening. Interestingly, CB Insights tracked 8 Series B deals over $25M so the distinctions between rounds have gotten blurrier in cybersecurity as investors are keen to invest in the space and often in large amounts irrespective of series or stage. Series C dollar share doubled, with deals including Shape Security and Skyhigh Networks.
Most Well-Funded Cybersecurity Startups
Good Technology tops the list of most well-funded startups, having raised more than $550M over it’s life time. The company has been making a number of acquisitions, including Fixmo and Boxtone and is part of the tech IPO pipeline. Lookout managed to take the number 2 spot after their $150M financing which included Khosla Ventures, Accel Partners, and A16Z among others. Cumulatively, the most well-funded startups have raised more than $1.86B dollars.
|1||Good Technology (Visto)|
Most Active Investors
Among VC investors, Intel Capital is the most active investor in cybersecurity startups having invested in more than 20 companies since 2010. Intel backed companies include OpenPeak, Prolexic Technologies, and Bromium. Accel Partners and KPCB took second and third place respectively, investing in more than 15 unique companies each. Intel and Google were the only corporate investors that made the list of most active investors.
|3||Kleiner Perkins Caufield & Byers|
|6||Bessemer Venture Partners|
|9||Norwest Venture Partners|
|10||Lightspeed Venture Partners|
In early stage investments, Andreessen Horowitz ranked first, making Series A investments in companies like PagerDuty and BlueBox Security. Google Ventures and Accel Partners tied for second, with 10 disclosed investments each.
|4||Kleiner Perkins Caufield & Byers|
|4||Bessemer Venture Partners|
|8||Norwest Venture Partners|
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