Cybersecurity’s Billion Dollar Bonanza

It would be hard to argue that the year-and-a-half long spree of data breaches that has hit targets ranging from the retail store to the White House itself has been good for anything.

Unless, of course, one runs a cybersecurity firm – in which case the recent rash of online crime has been very good for business, as firms seeking to stop the looming and expanding hacking issue have collectively raised over $1 billion in venture funding to lock those hackers out.

In Q1 2015, security startups backed by big name VCs like Andreessen Horowitz and Kleiner captured exactly $1.02 billion – almost doubling the $540 million brought in at the same time last year. In total, 2014 saw $2.3 billion flow into security startups. In 2010-2011 that sum was less than $1 billion.

“Within cybersecurity, venture capitalists were most interested in mobile security, which was the most active subsector of the quarter for new venture fundings,” said Sam Hamadeh, chief executive of PrivCo. “Cyber attacks against enterprises have spread from the server and the desktop to the worrisome soft target of mobile phones, where not only files but stored passwords, emails, text messages, even actual phone calls could be spied upon with malware.”

Cybersecurity firms will be on display at the RSA conference kicking off today, and VS will be out in force looking for the next big security innovation to fund. Many are predicting a boom in cybersecurity M&A, as larger companies who have struggled with security are looking to grab up some innovative new talent.



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