While the cybersecurity industry previously attracted investors by the coach-load, it has been reported that start-ups in the sector are now struggling to get the funding that they need.
As a result, some businesses are being sold off or are cutting back on their spending. This is affecting hundreds of companies, which have developed out of concerns about cyberattacks and data security breaches. Many have found themselves unable to make themselves stand out from their competitors and are not impressing customers with their solutions for the increasingly sophisticated attacks that are taking place.
In the US alone, it is reported that $3.3 billion was invested into 229 cybersecurity deals last year by private investors. However, only the most mature cybersecurity companies with substantial sales are able to attract a satisfactory amount of funding. Some cybersecurity companies are also reporting that it is taking much longer to close a deal than it used to. A few years ago, a deal could be closed within four months but the average time is now six to eight months.
One of the main issues is that many start-ups focused on technology that was readily available or have suffered from their data security products being conquered by hackers. Too many products were launched and considered to be obsolete almost immediately. Experts predict that this slump in funding is set to continue and this will also continue to affect stock values, with many cyber security companies seeing a substantial drop.