Big Rounds Push Cybersecurity Comeback

Cybersecurity venture investment jumped 43% in 2024 from the previous year as big rounds came back strong. That was despite flat funding quarter to quarter in Q4 and a smaller number of deals during the year.

Total funding to VC-backed cybersecurity startups hit nearly $11.6 billion last year, per Crunchbase data. That tops the $8.1 billion raised by startups in 2023, though remained well under the $17 billion invested in 2022.

Fewer deals, but big bucks

While dollars were up for the year, deal flow slowed notably. Only 639 rounds were announced last year, a 22% decline from 2023 and a 37% drop from 2022.

Despite the slowdown in the number of rounds, last year also saw a slew of huge deals completed in cyber. In fact, there were 29 rounds of $100 million or more raised by cybersecurity startups — compared to only 18 in 2023. Those rounds included:

Fourth quarter flat

The last quarter of the year did not provide a huge boost to 2024’s funding totals, as the $2.2 billion invested in 124 deals was about even with Q3, according to Crunchbase data. The number, however, did represent a 29% uptick from Q4 2023 when only $1.7 billion was invested in 170 rounds.

The biggest deals of the quarter included:

What it means

Although year-to-year numbers are higher, there do seem to be some issues pressing on cybersecurity funding numbers that cannot be ignored.

The fourth quarter last year represents the seventh consecutive quarter deal flow has slowed. It seems that while investors are betting big money on a select few companies, fewer companies are getting cash and that could soon cause some havoc in what is a typically well-funded startup environment in cyber. If funding slows more and exits remain difficult, startups may have to look at shuttering as the lone possibility.

Also, there is a real possibility that some VCs who looked at cyber are instead focusing their time and efforts on AI — which just completed an unheard of fourth quarter regarding venture investment. If investors — or at least their fund’s money — find AI more compelling right now, cybersecurity startups may find fundraising difficult, unless of course they too have an AI play.

Whatever the case, there is no denying fewer cyber companies are getting funded — and that could spell trouble for those founders who are looking for cash in 2025.

Related Crunchbase Pro list:

Related reading:

Methodology

Cybersecurity is defined by the industries of network security, cloud security and cybersecurity, according to Crunchbase data. Most announced rounds are represented in the database; however, there could be a small time lag for rounds reported late in the quarter.

Illustration: Dom Guzman