Private Equity for Cybersecurity Startups

If you’re in the budding stages of forming a cybersecurity company, you’re part of a global industry that is set to surpass $317 billion by 2027. This means that there’s plenty of room for growth – especially with the correct investment strategies.

There are entire companies and funds you can explore when you need the helping hand of investors. We’re happy to explain what you should know about approaching them and prepping your cybersecurity startup for success.

Here’s what you should know about getting the cybersecurity investing help that you need for your new company.

Examine Your Capital Needs

Before anything, you should explore what type of cybersecurity investment will help your company grow effectively. Companies are beginning to understand the cost of not handling cybersecurity needs, which means you can grow a company that is always in demand.

Here are the core things you need to consider:

Know What You’ll Do With the Money

Every startup has a checklist of needs. A cybersecurity startup will likely have some of the following startup costs:

  • Funding to pay for certifications like Certified Information Systems Auditor (CISA), Certified Ethical Hacker (CEH), CompTIA Security+, and Certified Cloud Security Professional (CCSP)
  • Legal costs to help with business filings, employee relations, real estate, and other needs
  • Various Software as a Service (SaaS) subscriptions
  • Equipment, hardware, and server needs
  • Digital marketing and advertising services

Investors want to know that you have a plan for your capital. Hash out these and other needs in a professionally drafted business plan. You might invest $3,000 or more in a professional business plan. This is worth every dime since it’ll help you hone your pitch and attract the right investors.

Study the Market

It’s also up to you to know the market you’re entering. Investors will want to see you have a strong grasp on the field before they’ll infuse capital. Here are some key cybersecurity trends your company must be on the cusp of:

  • Artificial Intelligence (AI) and machine learning
  • Virtual Reality (VR) and machines
  • Software as a Service (SaaS)
  • Advanced Network Security
  • Various coding languages, such as SQL, Javascript, and C++

When you study the economy as a whole, it’ll let you know important trends that affect what you do. Publicly traded cybersecurity stock options are great indicators. Cybersecurity stocks like Mandiant (MNDT) and Zscaler have performed well on the NASDAQ.

A lot of attention has been paid to Taiwanese chip production, and its increasing value as blockchain, cybersecurity, and related fields continues to grow.

Explore Options With Angel Investors

Now that you have an idea of what your startup is facing, you’ll need to attract the right investors. Angel investors are an excellent option because they can help you scale your company more quickly than you could do on your own.

These are typically individual investors who receive a share of equity in your company in exchange for their investment. Angel investors may also fund your company in exchange for convertible debt. Securing multiple angel investors is a tried and true way to power any of your startup goals.

Look Into Cyber Security Venture Capital

Cybersecurity companies today rely on venture capital firms. Cybersecurity VC funding is an influx of capital that your business can receive at any leg of the journey. Venture capitalists might help you in the planning stages, when your company is just an idea, or may offer the investment capital that takes you over the top.

Here are some advantages of looking into venture capital for your cybersecurity funding:

  • You’re getting access to investors that have knowledge and experience related to Wall Street, national defense, the Central Intelligence Agency (CIA), and other high-level, secure infrastructure
  • Venture capitalists can raise larger sums of money for you in a short amount of time
  • Getting funding this way offers excellent networking opportunities
  • Your company isn’t on the hook for repayment like you would with a loan
  • Venture capitalists offer several different funding options with flexibility

If you’re considering venture capital as an option, extensively study the background of the company. Schedule a consultation with the company to discuss your plans and to see their take on it and how their investment can help. Spend an extensive amount of time working out your pitch so that investors know you’re experienced and prepared to take action.

When you sit down to discuss your plans, have your balance sheets and cash flow statements laid out. Be prepared to offer presentations on things like projected growth, Earnings before interest, taxes, and amortization (EBITA), and other matters. The venture capital pros will let you know what types of funds they have available and can find the perfect fit for your startup.

Discuss matters with the heads of your company so that you know what give and take aspect of this relationship works for you. Figure out how much equity in the company you’re willing to cede, and what this means with your company’s growth timetable and long-term outlook.

Find the Cybersecurity Investing Help You Need

Cybersecurity investing is straightforward and productive when you consider the information in this article. The initial seed money that you seek will be a difference-maker for your cybersecurity business. Leave no stone unturned when you’re seeking investors that can help your startup hit the ground running.

At Option3, we use our relationships and varied experience in the field to help you get the results that you’re looking for.

Option3 combines national security and investment experience to help your cybersecurity company thrive. Reach out to us with our contact form, or call us at (212)897-2370.

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