A perfect storm of events over the past year has resulted in an explosion of new cybersecurity startups. First, the pandemic created the shift to increased remote work.  Soon, security concerns multiplied exponentially. And finally, an uptick in major hacking events, such as the Colonial Pipeline breach, propelled cybersecurity threats to new heights.

We have learned that hackers only need to exploit one opening within a system. That’s all they need at times to bring an entire company to its knees. The growth of remote work means more devices connected to more data points, all leading straight to a company’s crucial databases.

As always, the market provides solutions. Sensing widespread need and an opportunity, venture capitalists have begun pouring money into cybersecurity startups. At this point in the year, startups have raised more than $9.9 billion globally. That’s 96 percent of the amount raised just last year, at only the midpoint of 2021.

As a result, the average valuation of companies raising these funds has more than doubled to $475 million.

Cloud security is now the most rapid-growing segment of the information security sector. Startup cloud security firm Rubrik, based in California’s Bay Area, raised $374 million this year and reached a valuation of $3.67 billion. Another firm, Lacework, raised a whopping $525 million.

Identity verification applications have also boomed, as remote access has become more essential than ever. Trulioo raised $394 million to reach a valuation of $1.75 billion. Meanwhile, Okta cemented a $6.5 billion purchase of ID verification company Auth0 in May.

The lines between cybersecurity and other tech specialties have become increasingly blurred. For example, the payment platform Stripe just launched technology to verify user identities.

Even the insurance industry has jumped onboard the trend. Startups Corvus and Coalition both pair cybersecurity software with cyber insurance policies, hoping to reduce large claims. Perhaps one of these companies can strike gold with the perfect insurance product – to which customers pay premiums but never need to make a claim.

Currently, we see more capital supply than we have places to put it… and that drives up prices. For more information on taking advantage of these conditions, call our office to secure representation and guidance for your startup venture.

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