If you looked at venture capital investment trends in the cybersecurity market, you’d be excused for thinking that the sector was struggling. Crunchbase data indicates that cybersecurity startups raised $1.9 billion in the third quarter, across 153 deals. The amount was better than the $1.7 billion startups in the sector raised in Q2 2023, but deal count declined from 181 deals.
Investment Decline in Cybersecurity
The Exchange explores startups, markets and money. Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday. But Crunchbase goes on to note that with third-quarter cybersecurity venture funding down 30% compared to the year-ago period, investment in the category could fall to its lowest level since 2019.
Other sources are also tracking a decline in cyber venture investment this year. That’s not a huge surprise since venture capital investment has largely been in retreat in 2023 compared to the past several years. But given public cybersecurity companies’ performance these days, we’re a little bit puzzled at just how tepid venture investment in this space is.
Fintech Sector Comparison
It makes sense that fintech as a sector is suffering, since those companies’ growth rates have come down, and the startups that benefited from pandemic-driven tailwinds have since seen their valuations slashed. PayPal’s revenue, for example, rose 8% in the third quarter, and the company’s price/sales multiple has collapsed in recent years (price/sales is the grown-up version of a startup revenue multiple).
Observe:
- Startups building fintech products will struggle to earn a double-digit revenue multiple when they go public.
- Less venture capital investment in fintech can be expected.
Cybersecurity Sector Performance
Lots of revenue growth across the board? Yep. Solid earnings multiples compared to other tech sectors? Check. And yet, cybersecurity venture capital investment remains lackluster. Perhaps venture capital investment rates lag market performance more than we thought? Or has late-stage investing declined so much that no technology subsector can really post impressive investment numbers?
Industry Insights
I’m not sure, but I would wager that next year, we’ll see cybersecurity venture investment post a solid recovery.
Related Topics
- crowdstrike earnings
- EC Cybersecurity
- EC Market Analysis
- EC Venture Capital
- Palo Alto Networks
- Security
- Startups
- The Exchange
- Zscaler
Author Bio
Alex Wilhelm is a Senior Reporter for TechCrunch, covering the markets, venture capital and startups. He was also the founding host of TechCrunch’s Webby Award-winning podcast Equity.
Most Popular Articles
- Duolingo sees 216% spike in US users learning Chinese amid TikTok ban and move to RedNote
- Tesla to split $100M award for electric truck charging corridor in Illinois
- Bluesky is getting its own photo-sharing app, Flashes
- PowerSchool data breach victims say hackers stole ‘all’ historical student and teacher data
- UnitedHealth hid its Change Healthcare data breach notice for months
Newsletter Options
Subscribe for the industry’s biggest tech news:
- TechCrunch Daily News: Every weekday and Sunday, you can get the best of TechCrunch’s coverage.
- TechCrunch AI: TechCrunch’s AI experts cover the latest news in the fast-moving field.
- TechCrunch Space: Every Monday, gets you up to speed on the latest advances in aerospace.
- Startups Weekly: Startups are the core of TechCrunch, so get our best coverage delivered weekly.
