Some Cybersecurity Startups Still Attract Funding Despite Headwinds

With the plunge in tech stocks and the freeze in the IPO market, the funding environment for cybersecurity startups has come under pressure. According to Pitchbook, the amount of venture capital investment in the first quarter was off by 35.8% to $5.1 billion on a quarter-over-quarter basis. The median late-stage valuation fell by 26.1%.

VCs are certainly getting pickier with their investments. There needs to be not just  strong growth on the top line, but also a reasonable path to profitability.

Despite those headwinds, there are some interesting deals getting done in the cybersecurity market.

“Cybersecurity innovation is alive and well and cybersecurity continues to be a spending priority for public and private sector institutions,” said Alberto Yepez, managing director and co-founder at Forgepoint Capital.

Here we’ll take a look at four recent deals that stand out – and give you a quick rundown of last week’s RSA Innovation Sandbox startup contest while we’re at it.

Also read: Top VC Firms in Cybersecurity for 2022

Laminar

Laminar raised $67 million earlier this month, which came after a $37 million round in November 2021. The investors included Tiger Global Management and Salesforce Ventures.

The company is fairly young. Amit Shaked and Oran Avraham co-founded the business in September 2020.

They saw an opportunity in the public cloud data security market. Laminar’s platform allows for protection across the hyperscaler solutions as well as cloud data warehouses, such as Snowflake’s. The system is API-only, and no private information leaves a customer’s systems.

Laminar has been innovating at a rapid clip. In the latest release, the company announced the following:

  • SOC 2 Type II certification
  • Microsoft Azure support
  • Comprehensive data-centric security policies
  • Discovery and classification of “shadow data,” which is not tracked by IT

It’s true that the market is highly competitive. But it is also a large category and the latest funding will certainly help drive the growth.

Also read: CNAP Platforms: The Next Evolution of Cloud Security

CertiK

Web3 is one of the buzziest categories in technology today. Elite venture capital firms like Andreessen Horowitz and Sequoia Capital have been investing substantial amounts in this startup market.

The belief is that Web3 is the next online platform and at its core is blockchain. This allows for a more decentralized system, in which users can better control their own data and even monetize it through crypto tokens.

But there is a problem: cyber breaches. Just look at Axie Infinity, which is a Web3 game. In March, a security breach resulted in the theft of about $620 million in Ethereum and USD Coin.

In light of this, it’s not surprising that funding for Web3 security startups has surged. Perhaps the most notable deal is CertiK. In April, the company raised $88 million, which included investors like SoftBank Vision Fund 2 and Tiger Global. During the prior nine months, CertiK has hauled in about $290 million in venture funding. Its valuation was at $2 billion.

The CEO and cofounder is Ronghui Gu. He is still an assistant professor of Computer Science at Columbia University and is the developer of core Web3 security technology like CertiKOS and SeKVM.

Among early-stage cybersecurity firms, CertiK is unique in that it is profitable. At the time of the funding, the company secured over $300 billion crypto assets and revenues had surged by 12X since 2021.

Devo Technology

In June, Devo Technology announced a Series F funding for $100 million at a $2 billion valuation. The lead investor on the deal was Eurazeo. Since its founding in 2011, Devo Technology has raised over $500 million. The plan is to use the capital to expand into new countries, bolster R&D, and acquire other startups.

Devo has developed a cloud-native logging and security analytics platform. The system can manage a large number of security tools and provide real-time insights. What’s more, AI is becoming a big part of the strategy. To this end, the company recently acquired Kognos. The company leverages AI for threat hunting.

In terms of the growth for Devo, it has been impressive. For the past fiscal year, the revenues jumped by nearly 100% as did the customer base, which includes companies like AT&T and Sonos.

JupiterOne

Just two weeks ago, JupiterOne – on our list of the Hottest Security Startups for 2022raised $70 million in a Series C funding round. In all, the company has raised over $119 million and the valuation is more than $1 billion. The lead investor on the deal was Tribe Capital.

Before founding JupiterOne in February 2018, Erkang Zheng had led various large organizations through their digital transformation efforts. What he found were major challenges with security, governance and compliance. He saw there was a need for a platform that would be a graph knowledgebase of all digital assets.

The strategy was certainly a smart one. JupiterOne has become a top player in the fast-growing cloud-native cyber asset attack surface (CAASM) market. The company’s platform, which is for the cloud and on-premises environments, allows for continuous mapping of IT networks.  According to JupiterOne CEO and founder Zheng, “We provide our customers with valuable security context and true visibility of their organization’s cyber asset landscape using data and automation, to help them prioritize risks and protect their business.”

With the infusion of capital, the company plans to ramp its staffing for its enterprise sales organization. There will also be more investment in the self-service platform, which will expand the market into the small and midsize business segments.

See also: Top GRC Tools & Software

Talon Tops RSA Innovation Competition

Last week, 10 startups competed for recognition in RSA’s Innovation Sandbox contest. Five of them made our list of the top cybersecurity startups – including the winner, Talon Cyber Security, which offers a secure browser purpose-built for enterprise visibility and control of SaaS applications.

Zero trust cloud infrastructure access provider BastionZero was the other finalist besides Talon.

Other startups competing included:

  • Threat management solution vendor Araali Networks
  • Cloud investigation and incident response platform vendor Cado Security
  • Software supply chain security solution provider Cycode
  • DataGovOps provider Dasera
  • Cloud DevSecOps provider Lightspin
  • API security provider Neosec
  • Cloud-native asset intelligence vendor Sevco Security
  • No-code security automation platform vendor Torq

Read next: Top Cybersecurity Companies for 2022

Tom Taulli
Tom Taulli
Tom Taulli is the author of Artificial Intelligence Basics: A Non-Technical Introduction, The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems and Modern Mainframe Development: COBOL, Databases, and Next-Generation Approaches (will be published in February). He also teaches online courses for Pluralsight.

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