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Boom In Cyber Security Investment: Venture Capitalists Chase Rising Its Spending
From now Investors have been pouring money for selling "next generation" security products into other companies. From the past few years, the news headlines grab cyber-attacks on the leading companies that made one thing very clear and cogent that: it's not enough to rely only on traditional security tools.
In 2014 Gregg Steinhafel, the CEO of Target became the first head of a major company to lose his job over a data breach.
Now, worried company leaders are giving their security units a “blank check,” says Scott Weiss, a general partner who specializes in security at the venture capital firm Andreessen Horowitz: “The CEO has said, ‘Look, whatever you need, you’ve got.’”
The advanced technologies of threats that are used by criminals are too much sophisticated for traditional tools like antivirus software and firewalls. Security executives are increasingly venturing into agreements with cybersecurity startups.
According to CB Insights,
The global VC community poured a record $2.5 billion into cyber security companies in 2014, a strong year for IT startups in general and software in particular. Security companies raised another $3.3 billion in 2015.
Whatever the problems solved by these startups are complex. The bad guys do have better weapons, but business systems are also becoming vulnerable in new ways. Nowadays businesses are relying more on cloud services, and the employees of those companies are using more connected devices.
A few years ago, whatever the conventional approach to security was there, they were only entailed building a wall around valuable data and using software to detect known signatures of malicious code. But this new generation of malware can be custom-built for a particular network, and tits human operators more precisely control them.
Dealing with such specialized, fast-evolving adversaries requires changing the security paradigm from prevention to “active cyberdefense,” says Nicole Eagan, CEO of Darktrace, a two-year-old company based in Cambridge, United Kingdom. Hackers are going to get in, so the trick now is to find them “in near real time as they are moving subtly and silently around your network” and catch them before they do any real damage, she says.
So many companies are there who make promises that their detection technologies can do that, can do this but in reality, no one can. Darktrace has raised $110 million in VC funding and are relies on advanced machine-learning technology to analyze raw traffic.
Eagan explains, that
“determine a baseline for what’s normal” for every person using the network so that it can detect abnormal behavior.
Along with the threats going more numerous and advanced, the companies secure networks are also growing more complex and massive. And each and every device on a network is a potential target for hackers, and new security technologies focused on them are getting lots of attention from investors.
With all these Security Investors are also focused on the fact that businesses and organizations are putting more and more data in the cloud.
Greg Dracon, a partner at .406 Ventures who has invested in several security companies, all this investor attention is driving prices too high overall, and that the market has gotten ahead of itself, at least for the near term. However, the security market itself has another decade of growth, at least, he believes. “The problem set is outpacing the solution set,” he says, “and I don’t think there’s any end in sight to that.”