Venture capital funding of cybersecurity firms hit record high in 2018: report

[January 17, 2019]    By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - Venture capital investments in cybersecurity firms hit a record high last year amid a surge in cyber crime over the last few years, according to a report released on Thursday by U.S.-based Strategic Cyber Ventures.

Total venture capital funding in the space totaled $5.3 billion in 2018, up 20 percent from $4.4 billion seen in 2017.

"We're seeing mega-breaches happening on an extremely frequent basis," Chris Ahern, data scientist and principal at Strategic Cyber Ventures, told Reuters on Wednesday.

"I don't think that's going to stop anytime soon. And investors are seeing that as an opportunity for investment."

Cybersecurity has become the focus for governments and corporations around the world as digital crime increases.

The latest quarterly data from cybersecurity firm ThreatMetrix showed that it detected 210 million attacks in the first quarter last year, with another 151 million seen in the second quarter. Compared with 2015, cyberattacks have surged more than 100 percent, illustrating an overall heightened risk landscape over the last two years, ThreatMetrix said.

U.S. cybersecurity firms took the bulk of investments, accounting for 46 percent of investments in 2018, according to the Strategic Cyber Ventures report. Asian and European companies took 22.6 percent of global investment, up from 12.7 percent in 2014.

"We've seen this trend in the broader tech ecosystem as well, with many large international funds and investment outside of the U.S.," the report said.

"Simply put, amazing and valuable technology companies are being created outside of the U.S."

That said, Ahern sees a bit of a pullback in investments for this year. "There is still a lot of money being put to work in 2019. I do think investors are a little bit weary, there's a bit of vendor fatigue," he added.

Asked about the biggest cybersecurity threat in the world, Strategic Cyber Ventures co-founder and chief executive officer Hank Thomas told Reuters that he considers the People's Liberation Army -- China's armed forces -- as the largest cyber threat actor in the world.

"They're playing the long game. They have been able to use cyber to facilitate all sorts of things beyond just information warfare," said Thomas, who is a former U.S. army intelligence officer focused on cyber, signals intelligence, information operations, and military intelligence planning.

Strategic Cyber Ventures has a $100 million portfolio that includes four cybersecurity companies.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Phil Berlowitz)

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