L: Casey Ellis, Founder & CSO, Bugcrowd. R: Dave Gerry, CEO,
L: Casey Ellis, Founder & CSO, Bugcrowd. R: Dave Gerry, CEO, Bugcrowd

The year of the comeback for cybersecurity investment – probably

Julian Patterson, Zonic Group

“Two years from now, spam will be solved” – Bill Gates, 2004.

The tech world is littered with embarrassing predictions, such as Digital Equipment boss Ken Olsen’s assertion (1977) that no one would want a computer in their home. Before that was vacuum cleaner boss Alex Lewyt’s even wilder prediction (1955) that nuclear powered vacuum cleaners would appear within ten years.

It would be a brave pundit who declared that cybersecurity threats would go away in the foreseeable future.

Recently Cybersecurity Ventures predicted that the global bill for cybercrime would rise to $10.5 trillion by 2025. This astonishing number helps explain why we can safely predict that investor interest in cybersecurity firms, while it may have wavered in the past year, never stays down for long.


Growth-stage startups

This month Tech Crunch reported on $231.5 million in Series C funding raised by NinjaOne, provider of an endpoint management and security platform. The company had not been looking for the money, according to its CEO. Investors had come knocking on its door. By the time they’d parted with their cash NinjaOne’s valuation was nudging $2 billion.

The Tech Crunch article hints that NinjaOne’s story could signal a revival of interest in cybersecurity firms after a bumper crop of investments in 2022 gave way to a cautious 2023.

NinjaOne isn’t the only ray of hope. There are other signs that investors are loosening the purse-strings.

A few days after the NinjaOne news broke, crowdsourced cybersecurity start-up Bugcrowd raised a $102 million strategic growth round from a consortium led by General Catalyst. The company, founded 12 years ago in Australia but now headquartered in the US, told Reuters it plans to use the money for further international expansion including possible acquisitions.

Bugcrowd (a Zonic PR client) declined to disclose its revenue or current valuation, but its reported 43% growth spurt last year doubtless helped get investors over the line in the latest funding round.


IPO drought ending?

Bugcrowd and NinjaOne are both growth-stage start-ups, but there are strong signs of life downstream too.

In December Constellation Research predicted renewed IPO activity in the tech sector after two lean years. At around the same time, Forbes sounded a cautiously optimistic note in its round-up of imminent public share offers.

Cato Networks and Israeli firm Snyk are both reportedly lining up for IPOs this year. Snyk told CRN that most of the groundwork for its IPO had already been done towards the end of last year. A 2022 funding round took the company to a $7.2 billion valuation, making it one of the most highly valued of cybersecurity unicorns.

Cato Networks was valued at a more modest $3 billion after raising $238 million in 2023. Timing of Cato’s IPO is unclear, but the company is reported to be lining up banks in March, making a late spring or summer debut possible though in its public statements the company has indicated the second half of the year.

Another big player likely to emerge from private ownership, possibly as early as April is Rubrik, a cybersecurity software startup that numbers Microsoft among its backers and has annual revenues of $600 million. The company is still reportedly planning to come to market in the spring despite an ongoing US Department of Justice probe into alleged fraud by a former employee. Rubrik was valued at $4 billion when Microsoft got behind it in 2021.

Another interesting possibility is Netskope, the only one of the troika of Zscaler and Palo Alto Networks rated by Gartner as secure service edge (SSE) leaders to have resisted the lure of a public share offer to date. Last time it raised significant funding – $300 million in 2021 – Netskope was valued at $7.5 billion, making it another giant among unicorns.


Post-IPO eye-poppers

Netskope CEO Sanjay Beri appears in no hurry to go for a public listing, but a glance at the valuations of his rivals Palo Alto (out since 2012) and Zscaler (2018) explains why investors may be getting their appetites back.

In the past six months, Palo Alto shares have risen by 69.5%, valuing the company at $117 billion.

Over the same period, Zscaler has followed a near-identical trajectory, putting 69% on the share price for a current valuation of $36.3 billion.

Towards the end of last year’s relative cybersecurity funding drought, Tech Crunch wrote in September 2023: ”It’s very possible that we will not see more IPOs for some time.”

As 2024 opens with a promising array of green shoots, that statement serves as a reminder about the perennial dangers of predictions, particularly in the cybersecurity sector.

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