The number of venture capital (VC) deals in the security technology space reached 375 in 2018 vs 322 deals in 2017.
Of these, 313 deals disclosed funding value of around $5 billion vs $4.3 billion from 264 deals in 2017.
Low value deals with investment of <=$10 million dominated VC investments with 57.5 percent share in 2018.
There were relatively fewer high value deals with investment of >$100 million in the security technology space as compared to other emerging technologies such as artificial intelligence, Internet of Things and payment technologies.
“With cyber-threats increasingly posing challenges, there are opportunities for companies offering innovative solutions in the cybersecurity segment,” Aurojyoti Bose, financial deals analyst at GlobalData, said.
Companies are considering automation and AI-based cybersecurity solutions. Microsoft in February 2019 launched Azure Sentinel, an AI-based cybersecurity solution. Palo Alto Networks also introduced its AI-based security platform, Cortex.
Another challenge is security companies’ inability to maintain returns. F-Secure posted dip in its net income from EUR11.1 million in 2017 to EUR0.8 million in 2018. Sophos Group reported increase in net loss from $46.7 million in 2017 to $60.9 million in 2018. Palo Alto Networks reported net loss of $216.6 million in 2017 and $147.9 million in 2018.