Why Venture Capitalists Love Security Firms Right Now
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
The inside story of how ChatGPT was built from the people who made it
Exclusive conversations that take us behind the scenes of a cultural phenomenon.
How Rust went from a side project to the world’s most-loved programming language
For decades, coders wrote critical systems in C and C++. Now they turn to Rust.
Design thinking was supposed to fix the world. Where did it go wrong?
An approach that promised to democratize design may have done the opposite.
Sam Altman invested $180 million into a company trying to delay death
Can anti-aging breakthroughs add 10 healthy years to the human life span? The CEO of OpenAI is paying to find out.
Stay connected
Get the latest updates from
MIT Technology Review
Discover special offers, top stories, upcoming events, and more.