Cybersecurity startup Funding Report 2019

$7.9 billion

Startup Funding

456

Number of deals
( total deals)

$20 million

Avg Deal Size
(disclosed)

Cybersecurity startup Funding in 2019 by HexGn

Cybersecurity is a burgeoning segment within the global startup ecosystem. Technology seeping into various aspects has created ample opportunities for cybercrimes. The need for cybersecurity has been continuous and evolving as the data-based applications in personal and professionals lives evolve. From health details to banking details, almost everything is online, making the importance of cybersecurity ever-growing. In the last two years, $14 billion has been invested in the global cybersecurity segment.

According to HexGn Cybersecurity startup funding report for 2019, the total investments received by cybersecurity startup globally touched $8 billion, jumping 33% from what it got in 2018. Breaking the investment pattern continent-wise, North America and Asia have commanded most of the funding with total funding of $5 billion and $2 billion respectively. If we look at regions, that performed well in comparison to the previous year, all regions except Africa recorded a growth in investment amount. South America and Oceania saw the funding grow by almost three times.

According to HexGn Cybersecurity startup funding report for 2019, the top funding rounds of 2019 were of Qi An Xin, Verafin, KnowBe4, AnchorFree, and 1Password. Qi An Xin closed  a secondary market round picking up $542 million last year, this was the highest picked up in a single round in the cybersecurity segment and was not the only round of funding for the cybersecurity startup. Verafin raised $388 million and KnowBe4 picked up $300 million in private equity and Series D round respectively. Most of the top funding rounds closed in 2019 were by startups in 2019.

According to HexGn Cybersecurity startup funding report for 2019, the top five countries in terms of funding in the global cybersecurity arena were US, China, Canada, Israel, and the UK. The USA and China were the only countries whose funding crossed billion dollars. Startups in the US took home a total funding of $4.5 billion in 2019.

A look at the stage-wise performance points at a decline in investment amounts in early stage rounds(5%) and ICO & crowdfunding rounds (70%). Money being invested in the form of private equity in cybersecurity startups grew double from 2018 to 2019 and by almost four times in the debt funding rounds.

As the world retreats to staying and working from indoors and with various industries opting for creating online communities, the need for cybersecurity is going to be unparalleled in the coming years. San Francisco has been an undisputed leader among cities in the last two years, commanding the highest funding for cybersecurity startups. Last year, the cybersecurity startups in the city picked up $2 billion in investments. Other top-funded startup cities for cybersecurity in 2019 were San Francisco, Beijing, and Tel Aviv.

Cybersecurity Startup Funding Across Regions In 2019

The demand for cybersecurity technologies can be warranted as long as technology is an integral part of most aspects of life. With the data and cloud computing technologies growing, the need for cybersecurity also grows.  That is why it is no surprise that the investments in this industry has grown between in 2019 as compared to the previous year. The investments in 2019 touched $7.19 billion, growing by a massive 35%. According to the data collected by HexGn, the top countries in the cybersecurity segment for 2019 were USA, China, Canada, Israel, and the UK.

USA

The investments in the cybersecurity segment in the US remained stable with a 5% growth in 2019. The total investments in the segment capped at $4.5 billion.

The top funded organisation within this segment in 2019 was security awareness platform KnowBe4. It got an investment of $300 million in it’s Series D round and is also one of the top cybersecurity startups globally. Another notable deal was of Cybereason which raised $200 million in its Series E round last year.

For the US,there has been some amount of funding activities across all funding stages except ICO & crowdfunding. The investments coming in through the debt financing stages grew by four times in 2019.

China

The investments in the Chinese cybersecurity segment more than twice the amount last year, as compared to the figures of 2018. The total investments capped at $1.12 billion.

Of the 14 disclosed deals in the cybersecurity segment, the top two deals were by the same Chinese startup. Qi An Xin, completed two rounds of raising $542 million and $210 million, becoming the top startup in the segment for 2019. Another startup that raised a good amount was 360 Enterprise which raised $131 million in its Series B round.

Funding activities in the cybersecurity segment has been limited to mostly early venture, late venture, and seed stage rounds. Last year, there was some activity in the private equity stage for the first time in the last two years.

Canada

Canada has seen a majestic rise in the investments in the last two years. In 2018, the total funding came up to $77 million and within the year, the investments grew almost ten times to touch $773 million in 2019.

Verafin, a company that helps in protecting against financial cyber crimes, received $388 million in private equity last year. This is the highest amount of funding raised in a single round last year. Another startup that needs to be mentioned here is 1Password which picked up $200 million in its Series A round. The venture is offers secure password management solutions.

Compared to 2018 when the funding activities were only in the early venture, seed, and debt financing rounds, 2019 saw more activity in terms of the funding stages. There were investments flowing coming in through late venture and private equity stages as well.

 

Israel

Israel has been a super leader in the cybersecurity segment. The ecosystem is blessed with a government that takes active interest in growing its tech prowess especially in the area of the cybersecurity. This robustly growing Israeli segment raised a total of $567 million in 2019, registering a 20% growth in a 12-month period.

The highest funding in 2019 was picked up in the Series E round by Riskified. It raised $165 million in this round. The venture specialises in offering cyber security solutions for the e-commerce industry. Aqua Security was the second-highest funded startup in the Israeli cybersecurity segment. It completed its Series C round raising $620 million.

The funding in the Israeli segment has been mainly raised through the seed, early, and late stage venture deals. Late stage venture investments showed a impressive jump by 6 times while early stage funding rounds were the only ones to witness a decline.

UK

The investments coming into UK’s startup ecosystem through the cybersecurity segment fell by 30% last year. The total investments in the segment capped at $226 million in 2019.

There were close to 25 disclosed deals in the UK and AI-based cybersecurity company Onfide raised the highest funding among these. It completed its Series C round raising $50 million through it. Another notable funding round was by email cybersecurity solutions company Tessian which got an investment of $42 million in its Series B round.

Investments at the debt financing stage happened only in 2019 in the last two years, while it was completely absent in the private equity rounds in both years. Out of the other funding stages, the investments coming in through the seed stage and through ICO & crowdfunding rounds showcased a growth. The investments through the seed stage grew by over 200% while in the ICO & crowdfunding round, it was a growth of over 8 times, as compared to the investment amounts raised in 2018.

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