Experts predict the global cybersecurity market’s value will reach $371.4 billion in 2023. Are you ready to become part of this historical trend?
Meanwhile, your opportunities to invest in cybersecurity are global. North America leads venture capital funding, followed by Europe and Asia-Pacific. However, the investment sector should grow worldwide over the next five years despite regional economic conditions.
Let’s discuss why we’re confident in the market’s continued expansion. We believe that once you understand the magnitude of the possibilities within this niche, you’ll be anxious to add cybersecurity VC funding to your portfolio.
Russian Aggression Highlights Need for Cybersecurity
According to Microsoft, Russia launched a digital assault against Ukraine a year before invading the country. The cyber attack continued as soldiers on the ground advanced into Ukraine. For example, the invasion began on February 24, 2022, but from February 23 to April 8, the Russians initiated 37 cyberattacks.
The Russian incursion makes clear the future of warfare. Cyberattacks are no longer a novelty, but a disciplined and orchestrated maneuver commanders will use in conjunction with traditional tactics.
For example, Microsoft said that on the same day troops launched a missile at a TV tower, cyberattacks hit media outlets. The next day, digital invaders penetrated the defenses of the city government of Vinnytsia. The hack was a prelude to firing missiles at the airport two days later.
Additional Cyber Threats
Cyberattack victims in 2021 in the U.S. included JBS Foods, a meat processor, and the fuel industry’s Colonial Pipeline. Then in early 2022, the U.S. announced the discovery of an expansive malware known as Pipedream.
It’s packed with enough destructive code to take down substantial computer systems such as those of water and electric utilities and oil refineries. And experts say the malware is adaptable to use against almost any industry.
Companies Have No Other Option Than to Strengthen Security
As businesses become more reliant on digital technologies, they are also becoming more vulnerable to attack. Investment in cybersecurity is therefore expected to increase sharply in the coming years.
In 2019, there were over 4,000 data breaches in the U.S. alone, exposing over 164 million records. These attacks on average cost companies more than $8 million.
The cybersecurity architecture of organizations will have to expand to lower the costs of recovering from hacks. One of the reasons for change is the number of employees and contract workers logging into the network from home and elsewhere.
The state of an organization’s digital defenses is already a concern during talks of mergers. The logical extension is for prospective buyers and potential partners to require proof of a more robust data protection program than in the past.
Particularly Vulnerable Sectors Include Healthcare
A survey showed ransomware attacks on healthcare companies jumped 94% between 2020 and 2021. Hackers gained access to the healthcare records of nearly 50 million Americans in 2021. The breaches were only one-third that number just three years prior.
Victimized healthcare organizations paid the ransom in 61% of the cases. But they still could not recover 35% of their data.
If it becomes illegal, too expensive, or at least too complicated to pay the ransom, circumstances will incentivize more organizations to strengthen their cybersecurity.
Venture Capitalists Are Steering Their Money Toward Cybersecurity Investing
The firm Momentum Cyber reported that cybersecurity venture capital was $29.3 billion in 2021. That was more than double the $12.4 billion in 2020 and over triple the $9.7 billion in 2019.
Driving the cybersecurity growth is the North American market. The U.S. role as a superpower means a world full of bad actors who target U.S. government servers, banking networks, utility grids, and other computer systems whose failure would damage the economy.
Venture capitalists are responding by funding promising cybersecurity firms. For example, Colorado startup Swimlane LLC announced in July 2022 that it picked up $70 million in venture capital fundraising.
Swimlane focuses on SOAR (security orchestration, automation, response), which allows an enterprise to use smaller digital teams than traditionally to combat hackers. Crunchbase says Swimlane, launched in 2014, has pocketed $100 million in VC funds since 2016.
Elsewhere in the world, Cassava Technologies secured $50 million to upgrade the African continent’s overall digital ecosystem with cybersecurity as the primary objective. The company’s president said that hackers created a GDP loss of nearly $4.1 billion across Africa in 2021.
The Growth Rate of Cybersecurity Firms is Unprecedented
With the global cybersecurity market set to grow so rapidly, there are plenty of opportunities for VC-funded companies to achieve significant returns on investment.
The investment opportunities aren’t limited to a handful of companies. In 2020, only six privately-owned cybersecurity firms had billion-dollar valuations. But in 2021, 30 companies carried unicorn status.
There were 1,043 funding deals, with 83 worth at least $100 million. Dave DeWalt, the founder of Momentum Cyber, described this era as the golden age of cyber.
It’s not uncommon for companies only a few years removed from their first day in business to achieve a valuation of $1 billion. Two companies, Snyk and Lacework, launched in 2015, and both had a valuation above $8 billion by 2021.
Get Started With VC Funding
The need for cybersecurity increases. Criminals and state-sponsored hacker groups will always force their targets to expand and enhance their defense networks. But doing so takes money.
At Option 3, we specialize in funding up-and-coming cybersecurity innovators. If you’re an investor, we can advise where it’s most promising to plant your seed money.
Now’s the time to position yourself on the right side of history. Speak with us today about how you and your VC funding can play a role in the development of newer and better options in cybersecurity.