Sponsored By

Investors seem uninterested in reinvesting in startups that are not producing results.

Edward Gately

August 3, 2023

2 Min Read
Pinpoint: Cybersecurity Vendor Funding, M&A Down from 2022
Andrey_Popov/Shutterstock

Cybersecurity vendor funding fell last month, continuing a decline during the second quarter compared to the year-ago quarter.

That’s according to Pinpoint Search Group. It releases monthly reports on cybersecurity vendor funding and M&A.

Last month, $499 million in funding was raised in 21 rounds, compared to $591 million in 12 rounds for the year-ago quarter. Among noteworthy funding rounds were OneTrust securing $150 million in a funding round led by new investor Generation Investment Management, and NetCraft receiving over $100 million from Spectrum Equity.

Sasson-Mark_Pinpoint.jpg

Pinpoint’s Mark Sasson

“Between January and July of 2023, the median funding raised is $620 million and the average is $765 million, indicating July was a relatively light month,” said Mark Sasson, Pinpoint’s managing partner and executive recruiter. “When compared to May and June, the $499 million is more in line with the previous two months, seeing $407 million and $620 million raised respectively.”

The $1.9 billion raised during the second quarter represents a 55% decline in funding raised when compared to the year-ago quarter.
Funding volume was nearly identical with 97 funding rounds tracked in the second quarter of this year and the year-ago quarter.

For the first half of 2023, cybersecurity vendors raised $4.8 billion over 172 rounds.

The majority of the funding is from venture capital, Sasson said. Private equity plays more of an M&A and consolidation role.

“There is a trend where investors seem to be declining to reinvest in startups that are not producing results,” he said. “Instead, they are investing in a new generation of security tech and founders. This can be seen in our Q2 report where 45% of funding by volume went to seed companies. The companies that cannot attract more investment will presumably be attractive M&A targets where intellectual property (IP) can be purchased at a discount.”

Last month, there were nine M&A deals, according to Pinpoint. That’s up from eight in July 2022. Among noteworthy deals were Coro acquiring Privatise, Thales acquiring Imperva from Thoma Bravo for $3.6 billion, and Cisco acquiring Oort.

Nineteen M&A deals took place during the second quarter, down from 33 for the year-ago quarter.

Sasson said it’s hard to tell whether trends will continue during upcoming months and quarters.

“One theory might be that the previous two years were outliers,” he said. “No one wanted to miss an opportunity to invest in cybersecurity. There is a similar trend with AI investment today. So maybe we are seeing a sort of baseline emerging in security investment.”

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Edward Gately or connect with him on LinkedIn.

About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like