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January 8, 2024
1 min read

AI Ignites a Surge in Cybersecurity Investments for VCs


  • Venture capital investors are increasing their investments in cybersecurity due to advancements in artificial intelligence (AI) and a rise in data security breaches.
  • Indian cybersecurity startups have seen a 63% increase in fund inflows over the past two years, totaling approximately $130.7 million.

Venture capital (VC) investors are increasingly putting their money into cybersecurity, driven by advancements in artificial intelligence (AI) and the growing number of data security breaches. Over the past two years, Indian cybersecurity startups have seen a 63% increase in fund inflows, totaling around $130.7 million. The boom in technology across various sectors in India and worldwide has led to increasing concerns from companies and individuals about data and security breaches, prompting investors to make more proactive investments.

VC firm Accel, for example, has significantly increased its investments in the cybersecurity space in India over the past two years. Cybersecurity has become a priority sector, and VC investors see it as an important area globally. The Indian government’s push for digitization has further exposed entities to malicious activities, such as ransomware attacks and supply chain attacks, making cybersecurity investments crucial for organizations.

The global damage from cyberattacks is expected to reach $10.5 trillion annually by 2025, according to a McKinsey report. With the increasing adoption of AI and machine learning in the cybersecurity space, the intersection of AI with cybersecurity is driving significant investment in the sector. About 97% of Indian organizations are investing in AI and machine learning, and 84% are investing in cloud technology infrastructure.

Although progress is being made in the cybersecurity sector, challenges remain, including complex regulatory landscapes, balancing security measures with user experience, and addressing global threat variations. However, experts believe that India has a structural advantage in security due to its large number of security engineers, making it an attractive market for investors. Despite increased VC investment, the market has not yet reached its full potential, and it is estimated that it may take another 5-10 years before the cybersecurity market matures.

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