Private equity and venture capital investments in cybersecurity nearly doubled in the 12 months ended May 5, with total deal value at $8.51 billion compared with $4.46 billion for the same period in 2023, according to data from S&P Global Market Intelligence.
Total investment for the full year 2023 is $10.92 billion.
So far in 2024, 132 deals have been announced, compared with 457 deals announced in all of 2023.
Total investment for the year ending May 5 was $6.65 billion, exceeding the first two quarters of 2023 combined.
Sector Disruption
According to Thomas Crane, managing director at Insight Venture Management LLC, an increased focus on cybersecurity around the world is expanding the client base at the same time as major technological changes are occurring, disrupting the sector that private equity tends to seek out.
“The adoption of cloud has brought about a fundamental change in both how cybersecurity is delivered and how it is thought about,” Klein told Market Intelligence.
“The traditional data center-oriented cybersecurity stack has had to be completely rethought in an era of distributed workers, distributed workloads, and a concept where the original enterprise network has become the open internet. This has a profound impact on how incumbent cyber vendors and incumbents are disrupted.”
Klein said the number of players is growing, with new vendors emerging whose cybersecurity technologies are designed from the start to live in the cloud.
Alex Doll, founder and general partner at cybersecurity-focused Ten Eleven Ventures, added that consolidation has begun in the space and is expected to accelerate over the next six to 12 months, reducing the number of cybersecurity vendors.
Despite record investments, new cyber threats continue to require constant innovation. “As long as this trend continues, we’re going to continue to see investment in innovation, especially in the venture capital space,” Doll said.
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In the largest deal so far in 2024, Thoma Bravo LP has agreed to acquire cybersecurity artificial intelligence company Darktrace PLC for $5.21 billion in an all-cash deal.
Europe, driven by the Darktrace deal, had the most private equity and venture capital investments in the first half of 2024, with $5.34 billion. The United States and Canada came in second with $2.27 billion.
In terms of deal volume, the United States and Canada announced 72 deals, while Europe announced 28 deals.
