The cybersecurity startup market has been hot. On fire is probably more accurate. The graph above shows how investment has been ramping up over the last seven years.
Spending on cybersecurity in 2015 exceeded $75 billion according to Gartner. The market is over $100 billion (according to Market and Markets) and will grow to $170 billion (USD) by 2020, at a Compound Annual Growth Rate (CAGR) of 9.8 percent from 2015 to 2020. The cybersecurity insurance market is expecting significant growth and should reach $7.5 billion in annual sales by 2020, up from $2.5 billion this year.
But in 2015 signs were showing that the valuations and dollars heading to cybersecurity companies had begun to cool. Specifically, some are “predicting a measured slow-down leaving a slew of Seed/Series A funded companies without a Series B sponsor.” Median security EV/revenue multiples have declined from 5.5x in 2013, to 5x in 2014 and 4.5x in 2015.
That said, the problems still remain. Enterprises large and small, government agencies and individuals are still being targeted and compromised with increasing frequency. 2015 alone saw a reported jump of 48 percent in compromises that were reported, and successful detected attacks have been rising at a compounded annual growth rate of 66 percent year over year since 2009. The annual cost of these attacks range from hundreds of billions to trillions depending on your estimation methodology and sources (considering theft of IP versus just cleanup, for example).
Nobody has built the silver bullet solution to solve the problem and significant opportunities exist if entrepreneurs are really providing new solutions to the problems that exist and loom over the horizon in the form of technologies or services.
