📊 Cybersecurity Funding Review - January 2023

It's that time again.

Each month I do a recap on the business of cybersecurity funding and M&A news by the numbers, with visuals, and with my own commentary. I tweak these reports and add or remove sections and charts month-to-month based on feedback I get from readers like you. Let me know what I should start, stop, or continue.

This is the first monthly report for 2023.

I build these reports each month from some of the data I collect each week from the Security, Funded newsletter. If you're interested in poking through a different slice of the data, check out the Cybersecurity VC Database I made. It's the only open-source dataset like it!

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By the Numbers

A look at what moved the private cybersecurity market in January 2023 by the numbers.

• Approximately $1.1B was invested in 52 cybersecurity companies across 30 unique product categories in January 2023, up from $890.8M in December 2022.
• 26 companies across 16 unique product categories were acquired or had a merger event in January 2023. Managed Security Services Providers (MSSPs) and Professional Services continue to be the most acquired kinds of companies.
• ~81% of funding went to United States-based companies with ~6.5% going Israel-based companies and 5.4% going to United Kingdom-based companies.

2023 Compared to 2022

Here's the link to the newsletter where I originally shared this image in case you missed it.

I also offered a few takes as to why I think the chart looks the way it does on LinkedIn. Check it out and let me know what you think (and let's connect if we're not already)! 👇

Mike Privette on LinkedIn: #cybersecurity #security #software #startup #venturecapital…

Capital is looking a lot more cautious so far this year in the cybersecurity space. For anyone who might have missed Monday's issue of Security, Funded, I…

LinkedInMike Privette

My Thoughts and Predictions

• Buyers remain cash and resource-strapped through January and will last until at least Q2 2023.
• As predicted, January 2023 was much more muted in terms of funding activity for high-dollar transactions. Expect a bit of easing up on that in February in terms of companies coming out of stealth mode.
• February 2023 will be very telling for the cybersecurity industry. Most of the major public cybersecurity companies will be announcing their Q4 2022 earnings reports along with Q1 2023 forward-looking guidance and we will get a sense of just how resilient the large

Funding Events by Round Type

• 17 Seed round events equal to $59.9M
• 7 Venture Round round events equal to $107.0M
• 6 Series B round events equal to $122.9M
• 5 Pre-Seed round events equal to $2.2M
• 5 Non-Equity Assistance round events equal to an undisclosed amount

Top 5 Funding Events

• Netskope, a United States-based cloud security and secure access company, raised a $401.0M Convertible Note from Morgan Stanley. (more)
• Saviynt, a United States-based intelligent identity and access governance solution for cloud applications, raised a $205.0M Debt Financing from AB Private Credit Investors.
• Cloudian, a United States-based file and object data protection platform, raised a $60.0M Venture Round from Digital Alpha. (more)
• Hack The Box, a United Kingdom-based cybersecurity education and training platform, raised a $55.0M Series B from The Carlyle Group. (more)
• Cygnvs, a United States-based incident response management platform, raised a $55.0M Series A from Andreessen Horowitz. (more)

Top Funded Product Categories

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• $411.5M for Secure Access Service Edge (SASE)
• $231.0M for Identity and Access Management (IAM)
• $60.0M for Data Protection
• $55.0M for Digital Forensics and Incident Response (DFIR)
• $55.0M for Cybersecurity Education & Training

Top Lead Investor Teams

• $401.0M for Morgan Stanley
• $205.0M for AB Private Credit Investors
• $60.0M for Digital Alpha
• $55.0M for The Carlyle Group
• $55.0M for Andreessen Horowitz

Top Funded Countries

• $880.6M for United States
• $71.0M for Israel
• $59.9M for United Kingdom
• $32.6M for France
• $15.0M for Singapore

Top Acquired Product Categories

Data Collection Methodology

A few tenants I follow for collecting and creating this data:

• I only use public data sources
• I evaluate each company that makes this list to make sure they are actually solving a cybersecurity problem
• I personally assign the product category and write the description for each company (regardless of what the marketing says)
• All monetary values are in U.S. dollars and currencies are converted, if needed, at the time of collection
• All monetary values are from the time of collection

Wrapping Up

If you like a chart, statement, or prediction I made, let me know. If you want me to dig in further on something or see the data sliced in a different way, let me know.

It means a lot when you share these kinds of posts and subscribe to my newsletter!

Likewise, if you don't like something or if something doesn't make sense, let me know. I do this to contribute something new and add value to the industry so I want to make sure I'm also taking feedback.

See you again next month!

Cheers,

Mike P