Cybersecurity Fintech Companies Latest News Report

Lack of Big Deals Could Cause a Drop in Cybersecurity Investment in 2019

The capital raised by transactions valued at $75m and over in H1 2019 is 57.9% of the corresponding figure for the first half of last year 

The total amount invested in cybersecurity companies offering products in financial services globally reached $3.1bn across 169 deals in the first half of the year, just surpassing 40% of 2018’s annual level. Smaller transactions, valued under $75m, made up 63.3% of the capital raised in H1, showcasing the diverse range of smaller companies thriving in the sector. In fact, funding rounds in this bracket have collectively raised more than $2bn every year between 2014 and 2018, increasing from $2.2bn to over $3.0bn during that period. 

Global cybersecurity investment set a new record in 2018, with almost $6.9bn invested across 404 deals. This was due to a surge in larger deals, valued at $75m and over, which collectively raised $3.8bn. 

More than half of this capital was made up of three massive transactions, each valued at over $500m, completed by Hong Kong-based AI company SenseTime. The software company, which specialises in AI-powered recognition technologies, raised $2.2bn last year. Its offering includes face and text authentication services for fraud prevention. Since inception in 2014 it has reached a valuation of $4.5bn, and currently has over 700 clients and partners including Honda and Qualcomm. 

There was only one transaction valued at $500m or more in H1 2019. This dearth of massive funding rounds explains the lag in cybersecurity investment, which was $0.7bn lower than in H1 2018. New York- based Kaseya raised $500m in a private equity round in May. The company provides IT infrastructure management solutions. The CEO Fred Voccola said that the latest capital injection will be used to push sales to MSPs, which are deploying the software for the rapidly increasing demand of SMEs. 

Cybersecurity exits increased 15x between 2014 and 2018 

Exits in the cybersecurity space, including acquisitions and IPOs, have increased by a whopping 15x from 2014 to 2018. However, in the first half of 2019, there was a slowdown in exit momentum, with only 17 deals being completed, compared with the 23 in H1 2018. Tufin, a global leader in enterprise Network Security Policy Orchestration, completed the only IPO in the first half of 2019, raising $108m at a valuation of $453.6m. 

From 2014 to 2018, there has been a YoY growth in the number of exits, with a compound annual growth rate of 96.8%. This is testament to the growing importance among FIs and enterprises of installing adequate cybersecurity. A rise in cybercrime and cyber-attacks have increased the need for the integration of tighter cybersecurity controls. An example of this is California-based software firm Cylance, which utilises AI to prevent computer viruses and malware. Cylance was acquired by multinational tech conglomerate Blackberry for a $1.4bn price tag in November 2018. 

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