Vintage RSA Conference regarding all things cyber descended on San Francisco last week with tons of startups, crowds, parties and all the stuff you’d expect from a huge tech conference.
But it seemed that almost all of the individuals who were investing big money in the same cybersecurity startups were actually looking for a break from all the noise surrounding artificial intelligence.
“There’s a lot of noise there,” one investor said. “It’s getting harder and harder to get through most of them.”
There was a general consensus among VCs at the conference that while they are listening to many suggestions from startups that are using AI or helping to secure its development – comparable to around data protection, identity and third-party risk – many are spending time on investments.
“It’s not that we’re not listening,” one other VC said. “We just have not pulled the trigger yet. We have not seen any that actually moved us.”
Some investors seem hesitant to enter a market whose size they do not yet fully understand, and are skeptical of startups that claim to have a history with artificial intelligence when in fact they might or may not.
That said, AI cybersecurity startup funding volume appears to have actually made a comeback this yr after a slight decline in the fourth quarter. In the first quarter of the yr, investors pumped $263 million into such startups, compared to just $103 million in the fourth quarter of last yr. according to Crunchbase data.
The largest transaction of the first quarter was a $60 million Series E raise by the New York-based company BigID.
Already in the second quarter, investors agreed to transactions with start-ups price USD 410 million.
So while many preach patience, others seem to be writing the checks.
Other news and notes from RSA:
- The conference began with the news about the launch of cloud security Wizard closing the largest cybersecurity round so far this yr – a $1 billion round at a $12 billion valuation. The round surprised some, but the overall impression was that overall cyber funding levels were healthy and sustainable. While some dips and dips still persist, there has been a noticeable increase in each investor interest and actual money spent this yr (as we have discussed).
- One part of the interest in cybersecurity is disinformation startups. Brands care about their status greater than ever, and a A record number of over 60 democratic countries are holding national elections this yr. “Everyone is thinking about it,” said the investor. Investors are being attentive to startups that may analyze text, images and other data across multiple platforms comparable to the dark web and social media. Although, since some of the elections are already behind us, we have to wonder if this interest mustn’t have occurred earlier.
- Another thing on investors’ minds is the slow but strengthening mergers and acquisitions market. Deal making for cyber startups and startups in general is slowly gaining momentum, and many expect this to proceed as there has been much more “talk” about potential deals. “I think the fourth quarter will be really busy,” one investor said. “It’s not hard to look back and see when some of these companies last picked up growth, so they may be looking for an exit. Expect EP involvement.” This yr, a private equity fund was already lively. Late last month Tomasz Bravo – who had a lot of fun at the MOMA Summit in San Francisco during RSA – bought it Dark trace for a cool $5.32 billion in money.