Investments in cybersecurity enterprise capital ventures are up 43% in 2024 in comparison with the previous yr, with a strong return of huge rounds. This was despite flat funding quarter-on-quarter in Q4 and fewer deals during the yr.
Total funding for VC-backed cybersecurity startups reached nearly $11.6 billion last yr, in response to Crunchbase data. That’s up from the $8.1 billion raised by startups in 2023, although it stays well below the $17 billion invested in 2022.
Fewer offers, but big money
While the dollar rose during the yr, transaction flow slowed significantly. Last yr, only 639 rounds were announced, a decline of twenty-two% from 2023 and 37% from 2022.
Despite the slowdown in the variety of rounds, there have been also a lot of big deals in cyber space last yr. In fact, cybersecurity startups have raised 29 rounds of $100 million or more – in comparison with just 18 in 2023. These rounds included:
The fourth quarter remained unchanged
The final quarter of the yr didn’t provide a significant increase in total funding in 2024, as the $2.2 billion invested in 124 deals roughly flatlined in the third quarter, in response to Crunchbase data. However, this figure represented a 29% increase in comparison with the fourth quarter of 2023, when just $1.7 billion was invested across 170 rounds.
The largest transactions of the quarter included:
What does it mean
While the numbers are higher each yr, there seem like some issues impacting cybersecurity funding volumes that can’t be ignored.
The fourth quarter of last yr was the seventh consecutive quarter in which deal flow slowed. It appears that while investors are betting big on a select few firms, fewer firms are receiving the money, which could soon cause some havoc in the typically well-funded startup environment in the cyberspace. If financing slows down much more and exits proceed to be difficult, startups will have to contemplate shutting down as their only option.
There’s also a real possibility that some VCs that have change into interested in cyber will focus their time and efforts on AI as a substitute, which just ended an unprecedented fourth quarter for enterprise investing. If investors—or at least their fund’s money—find AI more compelling as of late, fundraising for cybersecurity startups could possibly be difficult, unless they, in fact, also have the opportunity to mess around with AI.
Either way, there is no denying that fewer cyber firms are getting funding – and that might spell trouble for founders looking for money in 2025.
Methodology
According to Crunchbase, cybersecurity is defined by the industries of network security, cloud security, and cybersecurity. Most announced rounds are represented in the database; nevertheless, there could also be a slight delay for rounds reported late in the quarter.