KUALA LUMPUR (Jan 6): Cybersecurity startups will likely continue to battle against a new fundraising reality as 2023 dawns.
In a report on Thursday (Jan 5), Crunchbase, which tracks trends, investments and news of global companies from startups to the Fortune 1000, said industry experts expect a continued softening of the fundraising market in cyber despite 2022 easily being the second best year ever in terms of raising venture capital in the industry.
2021 set a record for the sector, with more than US$23 billion raised by venture capital (VC)-backed startups in network, cloud and cybersecurity, per Crunchbase data.
While 2022 will only see around US$16 billion, that is still nearly double from 2020, the firm said.
It said the days of a cybersecurity startup generating less than US$1 million in revenue seeking a US$300 million pre-money valuation are over.
For those cyber startups that have trouble raising cash, more exits may become available, but maybe not the much-dreamed-about initial public offering (IPO).
Drivers
Some of the same things — or offshoots of them — will continue to drive cybersecurity trends in 2023, experts say.
Startups that can help with assessment, security posture management and data rights and privilege will continue to be looked at by investors.
While companies like Snyk, Netskope, Arctic Wolf and others are at the top of the list for IPO hopefuls, a number of them have run into trouble during 2022, with mass layoffs and other challenges maintaining growth.