TLDR:
- Cybersecurity startups saw increased funding in Q1 2024, with nearly $2.7 billion raised in 154 deals.
- Big rounds, including three over $100 million, contributed to the sector’s best quarter in three quarters.
In the first quarter of 2024, cybersecurity startups experienced a resurgence in funding, despite overall venture funding remaining somewhat sluggish. While funding for cybersecurity startups was down year-over-year compared to 2021, the sector saw its best quarter in three quarters. With nearly $2.7 billion raised in 154 deals, the dollar figure was the highest since Q1 of the previous year. This marked a 69% increase from the previous quarter, indicating a rebound for cybersecurity startups.
One notable difference in Q1 was the return of big rounds in cybersecurity, with three rounds exceeding $100 million. These rounds, including investments in companies like Quantinuum, NinjaOne, and Axonius, contributed to a total of nine cybersecurity startup funding rounds of $100 million or more.
While many cybersecurity startups utilize artificial intelligence in their platforms, the funding boom in Q1 was not solely attributed to AI. Companies like Nozomi Networks, Claroty, and Coro, which focus on industrial security and IoT security platforms, also raised significant amounts. This indicates a broader investment trend in cybersecurity beyond just AI.
Despite the positive funding trend in Q1, it does not necessarily signal a return to the peak levels of funding seen in 2021 for the cybersecurity sector. However, VCs and strategics continue to see value in investing in cybersecurity, which bodes well for the industry’s resilience in securing funding even in challenging market conditions.
Overall, the cybersecurity sector in Q1 2024 demonstrated encouraging signs of recovery and resilience, with high-value funding rounds and diverse investment opportunities across subsectors beyond just artificial intelligence.
