The COVID-19 pandemic has drastically influenced various aspects of our lives from remote working to online classes to online shopping even the most mundane tasks have moved to the virtual realm. The increase in online activity has resulted in an alarming number of cyber attacks. While companies scramble to protect their data, a major surge in cybersecurity funding can be observed.
Record Year for Cybersecurity
2020 has been quite a year and even though the year has ended, the problems have just begun. The drastic dependence on the virtual world has had major repercussions. A decade-long run of high venture capital (VC) funding, 2020 proved to be a record year for cybersecurity investments with over $7.8 billion pouring into 665 deals globally. Whereas, in the US only cybersecurity funding has increased 22% from 2019 to 2020, according to Crunchbase’s Report.
The report said, “With cyberattacks continuing to threaten businesses and jeopardize personal privacy, cybersecurity remains not only a hot topic but an imperative investment for any company, government or organization,”
About six new cybersecurity unicorns (companies valued at over $1 billion), were created in 2020 to help fortify the online community. Five out of the six of these companies are based in the U.S. Since the pandemic did not end in 2020, people are still heavily dependent on the virtual world thus the issue of cybersecurity needs to be tackled as soon as possible.
Consequently, in 2021, nine new cybersecurity unicorns have emerged, surpassing 2020’s record.
US and Israeli companies made up 90% of all venture funding for cybersecurity companies in 2020, with U.S. companies bringing in $5.9 billion or 76% of all global cybersecurity funding. While Israeli companies received $1 billion. Companies based in the U.K. obtained just over 3.0% ($262 million) largely due to an $80 million Series C round for data privacy company Privitar.
Crunchbase’s report further added that most of the cybersecurity companies in the US are based in San Francisco. Companies in New York have raised $874 million (nearly 15% of all 2020 funding). Whereas, Massachusetts was able to raise 12%, Texas 7.0%, Maryland 4.0%, and Minnesota 4.0%.
Additionally, the exit value in 2020 for cybersecurity companies was $6.8 billion globally across 72 transactions. Most (70) were acquisitions and just two were IPOs. Virginia-based TELOS went public at $1.1 billion and British Columbia-based company Plurilock went public for an undisclosed amount.
What can we expect later on?
As of now, it seems highly unlikely that the dependence on the virtual would decrease and we will go back to the pre-pandemic days soon. Companies have been cautious of illegal data transfers (duplicate photos) due to cyber-attacks while most people are concerned about their personal data as these malicious attacks continue.
The increase in cybersecurity funding may help companies improve the virtual environment and avert major disasters. We’ll have to wait and see if the additional funding is being put to use or was it just a huge waste.