VCs Invest Record $11.5B into Cybersecurity Startups in 2021

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Investors poured over $11.5 billion in venture capital funding into cybersecurity startups in the first half of 2021 alone. This amount is more than double the figure at this time last year. Experts say this investment stems from the growth in ransomware and supply chain cyberattacks.

Response to Growing Cyberthreat Landscape

According to Momentum Cyber, an advisory firm, investment in cybersecurity startups amounted to $11.5 billion in H1 2021.

The firm also said that more than 36 of the 430 total transactions amounted to over $100 million. These transactions include the $543 million Series A raised by Transmit Security and the $525 million round closed by Lacework.

This year, ransomware has accounted for 2.9 million attacks so far. Additionally, supply chain attacks such as the ones on Kaseya and SolarWinds increased by four times from 2020. The European Union’s ENISA has warned that traditional cybersecurity protections are no longer effective in defending against these types of attacks.

David DeWalt, founder and managing director of NightDragon, said he was concerned for commercial and government organizations around the world. He described the current climate as a “perfect storm of factors coming together to create the most aggressive threat landscape in history.”

NightDragon recently invested in multi-cloud security startup vArmour. DeWalt added that, as an investor, he felt a responsibility to help organizations against the growing risks.

Bob Ackerman from AllegisCyber Capital said that he had not seen anything like the current market climate. He also said that CEOs, boards of directors, and investors were “paying more serious attention to this space and putting the resources and capital in place to fund the innovations that address the cybersecurity challenges of today and tomorrow.”

M&A Transaction Volumes See Massive Increase

Mergers and acquisition (M&A) transactions have also gone up in the first half of the year, which include significant deals for companies in cloud security, security consulting, and risk and compliance.

Momentum said that the total M&A volume reached a record-breaking $39.5 billion across 163 transactions. This is more than 4 times the amount spent in 2020. In the first half of last year, the total amount spent was $9.8 billion across 9 transactions.

This year, nine deals were valued at more than $1 billion. This includes Proofpoint’s acquisition by Thomas Bravo at $12.3 billion, Auth0’s by Okta at $6.4 billion, and McAfee’s by TG at $4 billion.

Momentum Cyber described this activity as unprecedented, with both M&A and financing volumes at all-time highs. Their managing partners said that they “fully expect this trend to continue through the end of the year and into 2022.”

Technology policy researcher
Prateek is a technology policy researcher with a background in law. His areas of interest include data protection, privacy, digital currencies, and digital literacy. Outside of his research interests, Prateek is an avid reader and is engaged in projects on sustainable farming practices in India.