Venture capital investments help companies stay ahead of the cybersecurity curve

Industry benefits when startups with vision, potential to protect business data get funding

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In 2016, ven­ture cap­i­tal firms invest­ed in more star­tups than ever before. The year saw ven­ture VC firms invest a total of $3.1 bil­lion in 279 cyber­se­cu­ri­ty star­tups. This com­pares to $3.7 bil­lion of invest­ment in 272 star­tups in 2015 and $833 mil­lion in 117 star­tups in 2010.

Lev­els of invest­ment look set to con­tin­ue into 2017. The first two months of the year saw the indus­try attract more than $300 mil­lion of fund­ing. Tri­dent Cap­i­tal Cyber­se­cu­ri­ty alone has raised $300 mil­lion to invest in cyber­se­cu­ri­ty startups.

Relat­ed arti­cle: How ven­ture cap­i­tal is help­ing to com­mer­cial­ize gov­ern­ment research

The surge in invest­ment comes on the back of record data breach­es in 2016 and calls by Pres­i­dent Trump and oth­er world lead­ers to crack down on cyber­se­cu­ri­ty. In total, more than 4.2 bil­lion records were exposed last year, smash­ing the pre­vi­ous record of 1.1 bil­lion records set in 2013.

Alber­to Yépez, Tri­dent Cap­i­tal Cyber­se­cu­ri­ty Man­ag­ing Director

I had the chance to sit down with Tri­dent Cap­i­tal Cyber­se­cu­ri­ty Man­ag­ing Direc­tor, Alber­to Yépez at Black Hat 2017 in Las Vegas. We dis­cussed the world of cyber­se­cu­ri­ty ven­ture cap­i­tal­ism and how his firm and oth­ers are look­ing to increase their involve­ment in the industry.

Look­ing to Man­aged Secu­ri­ty Ser­vice Providers (MSSPs). There are two main rea­sons why Yépez and oth­er VCs are look­ing at MSSPs. The first is a short­age of cyber pro­fes­sion­als. Regard­less of your source, there are about a mil­lion jobs in cyber­se­cu­ri­ty. It is incred­i­bly hard to recruit and retain tal­ent. The sec­ond is the lack of a sin­gle uni­fy­ing plat­form that can secure every­thing. Instead, mul­ti­ple plat­forms are try­ing to secure mul­ti­ple dif­fer­ent com­po­nents. Because exec­u­tives aren’t able to acquire these things on their own, they are ask­ing if they can buy secu­ri­ty as a ser­vice. As the prob­lems grow, the pop­u­lar­i­ty of MSSPs will grow, too.

Look­ing toward secur­ing the Inter­net of Things (IoT). As more devices become con­nect­ed, secu­ri­ty is going to become an enor­mous issue. VCs like Yépez are look­ing at this on sev­er­al dif­fer­ent fronts—for indus­tries and indi­vid­u­als. Tri­dent already is work­ing with GE, ABB, and Siemens. But they also are look­ing at invest­ing in next gen­er­a­tion iden­ti­ty recog­ni­tion plat­forms to stop per­son­al data and cre­den­tials from being compromised.

Look­ing to get active­ly involved as investors. In the cyber­se­cu­ri­ty indus­try, investors aren’t going to sit silent­ly. Instead, they are going to get involved and to help star­tups scale. They’re also bring­ing their rela­tion­ships to the table, giv­ing these fledg­ling com­pa­nies access to the best chan­nels across the world. VCs aren’t just peo­ple try­ing to get ahead of the prob­lem, they’re try­ing to build glob­al com­pa­nies that are here to stay.

More sto­ries about ven­ture cap­i­tal invest­ing in cybersecurity:
Ven­ture cap­i­tal­ists start to tap into cyber­se­cu­ri­ty potential
Despite chang­ing land­scape, VC invest­ment in cyber­se­cu­ri­ty still strong
VC firm seeks port­fo­lio of start-ups to sup­press cyber adversaries