Skip to Content

Why Venture Capitalists Love Security Firms Right Now

Cultural and technological trends are driving record investments in security startups.
March 17, 2015

Venture capitalists poured a record $2.3 billion into cybersecurity companies in 2014, a year marked by frequent reports of hacks on high-profile companies. Yearly investment in cybersecurity startups been on the rise for several years now, and is up 156 percent since 2011, according to CB Insights. The trend will likely continue, as 75 percent of CIOs surveyed by Piper Jaffray said they would increase spending on security in 2015.

Though the technologies offered by the startups probably won’t swing the balance away from the attackers, they could help businesses adapt to the strong likelihood of getting hacked, says Lucas Nelson, who focuses on security as a principal investor at Gotham Ventures. New technologies reaching the market could help victims of break-ins by reducing the amount of time it takes to detect hackers and reverse the damage they cause, he says.

A new class of opportunities has also emerged because so much business has been moved to the cloud during the past five years. “There hasn’t been a commensurate level of spending in cloud security,” says Nelson.

The number of venture capital dollars flowing into the industry is still relatively small, though. In 2014 it was roughly a tenth the size of the sum invested in the entire software industry, according to PricewaterhouseCoopers. But according to the same firm, the growth in security venture capital last year compared to 2013 outpaced the surge seen in the software industry as a whole.

Keep Reading

Most Popular

Large language models can do jaw-dropping things. But nobody knows exactly why.

And that's a problem. Figuring it out is one of the biggest scientific puzzles of our time and a crucial step towards controlling more powerful future models.

OpenAI teases an amazing new generative video model called Sora

The firm is sharing Sora with a small group of safety testers but the rest of us will have to wait to learn more.

Google’s Gemini is now in everything. Here’s how you can try it out.

Gmail, Docs, and more will now come with Gemini baked in. But Europeans will have to wait before they can download the app.

This baby with a head camera helped teach an AI how kids learn language

A neural network trained on the experiences of a single young child managed to learn one of the core components of language: how to match words to the objects they represent.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.