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CyberScope – Q3 2017 Market Review

By Max O'Connell 12 Oct 2017

Welcome to the Q3 2017 edition of the CyberScope – Results International’s regular market update for the global Cybersecurity space.

Looking at the year to date, Cybersecurity stocks have continued their strong upward trend as significant ransomware attacks (FedEx and Maersk both negatively impacted by c.$300m in July due to the NotPetya ransomware) and data breaches (potentially 143m affected in the Equifax breach in July) have highlighted the exigency for improved protection. In the past quarter, Results International’s Global Cybersecurity Index tracked up 5.7%, mirroring the Nasdaq’s corresponding gain of 5.8% over the period.

Given the heightened focus given to Cybersecurity of late, incumbents have continued to refine and improve their offerings, exemplified by Symantec’s divestiture of its website security assets to Digicert alongside its double acquisition of Skycure and Fireglass in a bid to bolster the capabilities brought in by the Blue Coat acquisition in June 2016. Another trend continuing to materialise is the large enterprise software players adding security capabilities of their own rather than relying on external providers, Google’s purchase of Bitium to fortify its Google Cloud product a case in point. As in recent quarters, Infrastructure technology providers continue to strengthen their own cybersecurity offerings – Cisco acquiring Observable Networks to fold into the network security capabilities added via its takeover of Lancope in 2015.

Along with strong deal flow, the market for private investment in Cybersecurity has also surged, as valuations in the private markets remain very attractive and thus the preferred course of action for management looking to raise capital. Darktrace, the UK-based provider of AI-driven cyber threat detection and prevention, took on $75m in a Series D at a post-money valuation of $825m, bringing it to a total raised of c.$180m – and seemingly closer to a unicorn IPO. Alongside machine learning in Cybersecurity another prevalent theme is security for IoT – with Bastille Networks (USA) and Device Authority (UK) both raising additional funds over Q3 to enhance their capabilities in securing connected devices.

In sum, Cybersecurity has again cemented its place as one of the most marketable sectors in the technology world, and as such now would be a good time to be contemplating fundraising, exit or growth through acquisitions in the Cybersecurity space – if you are, please do get in touch.

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Cyberscope

We hope that you enjoy the document and look forward to discussing the data and underlying themes with you. We have also produced our view on the previous quarter’s proceedings in a series of other market reviews on:

Digital Services

Enterprise Software

HealthTech

AdTech & MarTech

The Tech Report (all 5 sectors)

Max O'Connell

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