- The analyst firm PitchBook predicts in a new report that the $134.6 billion cybersecurity market will hit double-digit growth in 2021.
The analyst's just-released Q3 report on cybersecurity foresees the booming industry reaching a market size of $179.3 billion by 2023.
- Big cybersecurity startups have exploded in 2020, as revenue remained strong but IPOs were delayed by a shaky COVID-19 market
- Here is an update from PitchBook on the 10 cybersecurity startups that have raised the most venture capital to date.
- Visit Business Insider's homepage for more stories.
The $134.6 billion cybersecurity market is going to reach double-digit growth in 2021 – here's the latest from PitchBook on 10 blockbuster startups leading the way
The $134.6 billion cybersecurity market is going to reach double-digit growth in 2021, according to PitchBook. Here are the 10 blockbuster startups leading the way
The $134.6 billion cybersecurity market is going to see explosive growth in 2021, according to PitchBook. Here are the 10 blockbuster startups with the most funding and unicorn valuations
The $134.6 billion cybersecurity market is going to reach double-digit growth in 2021, PitchBook says in a new report published this week, as billion-dollar startups continue to drive the evolution of an industry adapting to protect an evolving workforce.
Every segment of cybersecurity has grown by at least 5% this year, PitchBook says, and the overall industry will climb to double-digit growth next year and a market size of $179.3 billion by 2023. PitchBook analyst Brendan Burke says the industry will accelerate to new heights in part thanks to the need to protect a hybrid workforce.
"What's going to change in 2021 is that security departments will be able to get out of a short-term and reactionary mindset towards remote work and deploy some of the long-term projects" they put off this year, he says.
Cybersecurity startups overall raised $2.2 billion in Q3, led by mega-deals for Snyk, BioCatch, and Auth0. The COVID-19 pandemic has caused "a flight to quality" in cybersecurity, PitchBook says, with investors jumping into more late-stage VC deals for established startups than early-stage deals, which carry more risk.
In a typical economy, more of these booming startups might be going public, but the market has been up-and-down and only JFrog and Sumo Logic made splashy exits. Meaning: The big startups just keep getting bigger. They're also feasting on little startups as a slow merger-and-acquisition market keeps prices low, Burke says.
Burke says investors should keep their eyes on two rapidly growing sectors of cybersecurity in Q4 and the year ahead. The first is developer security, which landed Snyk and Auth0 their big rounds. The industry is adopting a new mantra – "shift left" – which means to put security far earlier in the software development process.
The other new area that's emerging is known as XDR – extended detection and response, in which automated programs are able to find and respond to cyberattacks without immediate human interaction. The $1.6 billion English startup Darktrace and the young company Confluera take on incumbents Palo Alto Networks and CrowdStrike in this space.
Here are the 10 powerhouse cybersecurity companies that have raised the most venture capital, with thoughts on each from PitchBook analyst Burke:
Netskope – $744 million raised
CEO: Sanjay Beri
Location: Santa Clara, California
Total venture capital raised: $744 million
Valuation: $3 billion (Netskope)
Investors: Sequoia Capital, Dell Technologies Capital, Base Partners, Lightspeed Venture Partners
What it does: Netskope develops a cloud analytics platform that eliminates blind spots, guards data and stops elusive attacks, all enabling businesses to protect sensitive data and ensure compliance in real-time.
What PitchBook says: Netskope "has really taken a central role in the industry for remote work security in particular in Q3," says PitchBook analyst Brendan Burke. It is now really able to challenge Zscaler and Palo Alto Networks." (Both are older, publicly funded companies.)
Tanium – $900 million
Co-CEOs: Orion Hindawi and Fazal Merchant
Location: Emeryville, California
Total venture capital raised: $900 million
Valuation: $9 billion (PitchBook)
Investors: Salesforce Ventures, SharesPost
What it does: Tanium offers enterprise management of security "endpoints," meaning that it helps protect laptops, mobile phones, and Internet of Things devices, which are all possible entry points into a company's corporate networks.
What PitchBook says: "Tanium has developed a comprehensive endpoint security suite with automated detection and response that was a goal of other companies. Tanium has achieved a complete vision. A round from Salesforce Ventures similar to Snowflake's could also put Tanium on a path for a breakout IPO, Burke believes.
Snyk – $454.5 million raised
CEO: Peter McKay
Total venture capital raised: $254.5 million
Valuation: $2.6 billion (PitchBook)
Investors: Stripes, Trend Forward Capital
What it does: Snyk makes security analysis tools designed to identify open-source vulnerabilities. The company's security analysis tools find, fix, and monitor threats in open source computer code.
What PitchBook says: Burke expects Snyk to barrel into a big IPO because it is acquiring smaller companies and extending its products to help developers build security throughout the life cycle of applications from development to production. CEO Peter McKay says an IPO in 2021 may be possible.
SentinelOne – $430 million
CEO: Tomer Weingarten
Location: Mountain View, California
Total venture capital raised: $429.5 million
Valuation: $1.1 billion (PitchBook)
Investors: Insight Partners, Samsung Venture Investment
What it does: SentinelOne makes endpoint protection software that protects devices and servers against malware and threats. The company's software unifies the detection, prevention, and remediation of threats initiated by nation-states and organized crime, enabling organizations to defend against advanced cyberthreats.
What PitchBook says: Growth paced by protecting remote workers and expansion into new areas has put SentinelOne on a path to a big IPO. "No one has demonstrated the same high growth opportunity in endpoint security and also the expansion into IoT and cloud for endpoint vendors," Burke says.
OneTrust – $420.9 million
CEO: Kabir Barday
Total venture capital raised: $421 million
Valuation: $2.7 billion (PitchBook)
Investors: Insight Partners, Coatue Management
What it does: OneTrust helps enterprises to comply with data privacy regulations such as Europe's Global Data Privacy Regulation with a data-inventory platform designed for privacy management that scans companies' networks for cybersecurity issues.
What PitchBook says: "OneTrust has become an unparalleled leader in GDPR compliance software and is benefiting from the explosion of privacy regulation software around the world," Burke says. "The company has really developed a customer-friendly suite of tools that address all the major challenges companies face." Burke estimated it would take two to three years for a competitor to catch up with its progress.
StackPath – $396 million
CEO: Christopher "Kip" Turco
Employees: Around 300
Total venture capital raised: $606 million
Investors: Cox Communications, Sweetwater Private Equity, Juniper Networks
What it does: A competitor with Cloudflare, StackPath is a content delivery network that supports data delivery and websites in the cloud. Its cybersecurity tools protect container-based applications built with computer code that is put together in building blocks of commonly connected code.
What PitchBook says: Burke says the company addresses a major security opportunity, since developers will deploy more cloud applications that conventional firewalls cannot defend. "Cloudflare has demonstrated the value of advanced security features for the category and we believe that StackPath is even more advanced in modern application security," he says.
Cybereason – $388.4 million
CEO: Lior Div
Total venture capital raised: $390 million
Post valuation: $1 billion (Cybereason)
Investors: SoftBank, Greenspring Associates
What it does: Cybereason is the developer of a cloud-based endpoint detection and cybersecurity platform designed to protect companies from advanced cyberattacks.
What PitchBook says: Burke says that Cybereason's success in the hot extended detection and response (XDR) area has driven growth in the company. "Its technology is achieving best in class outcomes at detecting threats to the endpoint" devices, such as remote employees' laptops.
Lookout – $380.7 million
CEO: James Dolce
Location: San Francisco
Total venture capital raised: $380.7 million
Valuation: $1.75 billion (PitchBook)
Investors: Abu Dhabi Catalyst Partners and T. Rowe Price
What it does: The Lookout Security Platform uses artificial intelligence to protect, detect and respond to phishing campaigns and advanced attacks involving app, device, and network threats on mobile endpoints.
What PitchBook says: "Lookout leads the mobile threat protection category and benefits from the increased usage of mobile devices in enterprises during COVID-19," PitchBook analyst Burke says. "The company has a blue-chip roster of investors with leading mutual funds and VC investors, demonstrating its high commercial traction and technical advancements." Burke says the company is picking up more enterprise business as it scales towards an IPO.
Auth0 – $333.5 million
CEO: Eugenio Pace
Location: Bellevue, Washington
Total venture capital raised: $213.5 million
Valuation: $1.92 billion (PitchBook)
Investors: Sapphire Ventures, Capital Partners, WiL (World Innovation Lab), Meritech Capital Partners
What it does: Auth0 helps developers build single sign-on, multi-factor authentication and passwordless logins and customize them to enterprise environments.
What PitchBook says: "Auth0 has become an essential tool for developers building customer-facing apps during COVID-19," Burke says. By helping developers to add authentication security to apps they are building, Auth0 has "established a sufficient market niche to differentiate from Okta."
Darktrace – $338 million raised
CEO: Poppy Gustafsson
Location: Cambridge, United Kingdom
Total venture capital raised: $338 million
Valuation: $1.6 billion (PitchBook)
Investors: Vitruvian Partners, Samsung Venture Investment, Kohlberg Kravis Roberts, Ten Eleven Ventures, and Balderton Capital
What it does: Darktrace develops a cyberthreat defense platform that detects and responds to previously unidentified threats, enabling businesses to protect their cloud, email, IoT, network, and industrial systems.
What PitchBook says: With a machine-learning approach to threat detection, Darktrace faces "weak" competition from incumbents including Cisco and FireEye, PitchBook says, adding that Darktrace "is an IPO candidate that may have to delay its plans in the current economic environment."
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