Cybersecurity
Move fast and patch things: why investors are throwing money at digital defenders
Last updated: 14 Apr 2022
Market 101
The “fourth industrial revolution” is one of those buzz terms that everyone loves to throw around. But revolutions can get real messy, real fast. Technologies like cloud computing and the Internet of Things are intrinsically vulnerable to cyberattacks. The rise in attacks during the pandemic — such as ransomware hits that crippled Irish hospitals and a fuel pipeline in the US last year — gave an unpleasant taste of what’s to come, unless companies and governments get serious.
On the upside, as the targets for these attacks grows, so does the opportunity for startups fighting them. Most of these digital defenders hope to make it as specialists for particular capabilities and user needs, whether they’re focusing on sectors like IoT and cloud or services like authentication or employee training. At least for now, there seems to be enough room for everybody who’s working to keep this revolution from turning into a nightmare.
Early stage market map
Key facts
€5tn
estimated cybercrime damages globally in 20211
238%
increase in cyberattacks globally between February and April 20202
80%
proportion of successful breaches attributable to “zero-day attacks” that exploit systems’ previously unknown security flaws3
Trends to watch
1. A much-needed paradigm shift
→ Legacy approaches to cybersecurity are based on periodic security checks of a limited number of data locations. But as data explodes, so too do the places where it’s stored.
→ Startups are now stepping in to make inventories of company data and assess what high-risk information should be prioritised.
2. Racing against the clock
→ With cyber threats mounting, and a wider adoption of IoT devices, there is a growing need to identify security breaches immediately.
→ While startups are using artificial intelligence to detect threats instantly, they’re at a nascent stage when it comes to responding to them with the same speed.
3. From complacency to “zero trust”
→ Zero-trust models may be the solution to cybersecurity in the age of hybrid working, as employees move in and out of their workplace’s network boundaries.
→ Rather than letting once-verified people roam freely within a network, this approach focuses on ongoing security checks, which could benefit startups focused on authentication and identification.
4. Halting hacker shopping sprees
→ Click, buy, like, expose: as ecommerce grows in popularity, product and platform security will be vital to safeguard digital storefronts and other engagement tools.
→ An explicit focus on protecting consumers may help turn cybersecurity from a burden into a real USP for ecommerce sites.
Startups tracked by Sifted
Sifted take
With demand for digital defenders only going in one direction, startups have been able to scale quickly as security-spooked companies seek solutions from niche startups and established providers alike. In the longer term, however, clients may increasingly look for complementary software from the same provider — so look out for greater integration and consolidation.
Rising stars
Europe's leading pre-Series A startups (all published data verified) We identify companies as ‘rising stars’ using a number of criteria including founder backgrounds, investor track record, funding and valuation, and growth signals
Provides a platform that helps companies identify and prioritise their vulnerabilities. Founder Francesco Cipollone previously worked in cybersecurity at organisations like Amazon and HSBC.
Round
Angel
Valuation
€18m
Date
2021
Size
€640k
Harnesses quantum physics to produce encryption codes for microchips that can be used to secure IoT devices. The startup is backed by the likes of Kima Ventures and Entrepreneur First.
Round
Seed
Valuation
€17.5m
Date
2021
Size
€3.7m
Backed by Breega, CrowdSec is able to mount a coordinated defence against attacks through open-source software that notifies everyone in its user community — essentially applying the same logic used by hackers in reverse.
Round
Seed
Valuation
€25m
Date
2021
Size
€4m
Early stage startups to watch
AppSec Phoenix
Network & cloud security
€640k
€640k
€18m
Awen Collective
IoT security
€1.5m
€685k
€3.7m
C2 Cyber
Network & cloud security
€1.4m
€1.4m
€1.4m
Croowly
Identification & authentication
€200k
€200k
€200k
CrowdSec
Threat detection
€7.4m
€4m
€25m
Crypto Quantique
IoT security
€11m
€3.7m
€17.5m
Cyberangels
€206k
€206k
€3.5m
Cyscale
Network & cloud security
€500k
€350k
€2.4m
Cyttraction
Employee engagement & training
-
-
-
Edgeless Systems
Network & cloud security
€1.4m
€1.4m
-
Intruder
Network & cloud security
€1m
€720k
€7m
Ironchip
Identification & authentication
€500k
€500k
€2.5m
Kymatio
Employee engagement & training
€1.2m
€720k
€2.5m
Lupovis.io
Threat detection
€700k
€700k
€3.5m
Seedata.io
Network & cloud security
€900k
€760k
€6.1m
Europe’s success stories
Who early stage startups are up against
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
→ Sells network security products to 6,000 customers
→ Market cap of €3.5bn (IPO’d 2021)
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
→ Targets the human aspect of cybersecurity by applying machine learning to email data and automatically flagging security risks
Sources
Research reports
Challenges and opportunities for EU cybersecurity start-ups | May 2019 | ENISA
2 Global Risks Report | 2020 | World Economic Forum
News articles
Why are cybersecurity asset management startups so hot right now? | February 2022 | TechCrunch
Starting your journey to zero trust adoption | October 2021 | TechCrunch
3 “Faster than real-time” cybersecurity company raises $100m | April 2021 | Sifted
Data is the world's most valuable (and vulnerable) resource | March 2021 | TechCrunch
Cybersecurity in 2021: Four predictions | February 2021 | Capgemini
1 Cybercrime To Cost The World $10.5 Trillion Annually By 2025 | November 2020 | Cybersecurity Ventures
Top cybersecurity VCs share how COVID-19 has changed investing | June 2020 | TechCrunch
12 top cybersecurity VCs discuss investing, valuations and no-go zones | June 2020 | TechCrunch
Cybersecurity startups come to the rescue | April 2020 | Sifted
The approach to risk-based cybersecurity | October 2019 | McKinsey
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