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CyberScope – Q1 2019 Market Review

By Jay Nathwani 16 Apr 2019

The cybersecurity industry shares many traits with other B2B software markets – it’s growing well, innovating rapidly, and is experiencing strong valuations and record M&A activity.

Welcome to the Q1 2019 edition of the CyberScope – Results International’s quarterly market update for the global cybersecurity space.

Highlights in the quarter:

  • The cybersecurity industry gathered in San Francisco for the annual RSA Conference. The conference theme this year was simply “better” – better solutions, sharper algorithms and being better at making cybersecurity a top organisational priority. Chris Lewis covers the key themes in his article ‘RSA Conference 2019: The year of “better” cybersecurity’ here, discussing how the industry is looking to up its game against increasingly strong, well organised, and well-funded criminal gangs and nation state actors.
  • Telecommunications operators have continued to make acquisitions in the sector– Orange acquired SecureData, NTT acquired WhiteHat, Comcast acquired BluVector and Verizon acquired Protectwise.
  • Zero trust cloud security solutions, which eliminate the idea that internal players are trustworthy, are at the top of enterprise C-suite boardroom conversations. 90% of organisations, according to a CA Insider Threat Report, feel vulnerable to inside attacks due to excess access privilege, an increasing number of devices with access to sensitive data and increasing complexity of information technology. The largest vendors have begun addressing the issue, with Symantec acquiring Luminate this quarter.

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  • Cyber intelligence will prove key to pro-actively dealing with individual, dynamic automated threats. Machine learning and Artificial Intelligence are proving critical to organisations looking to protect their assets as cybercriminals now themselves use such technologies to launch their own attacks. “Intelligence is becoming the new arms race between adversaries” – NTT data.
    • Venture capitalists globally, continue to back the need for greater threat intelligence as they invest in startups innovating in the space (UK-headquartered AI-based email security firm—Tessian—raised $42m led by Sequoia, for example).
  • After a downturn in valuations at the end of 2018, 2019 began with a significant uptick, closely mirrored by our global security share price index growing 22% over the quarter. We expect the market to continue to reward cybersecurity firms, especially those able to mitigate the biggest organisational risks such as Identity and Access Management, with vendors CyberArk, SailPoint and Okta trading at a median valuation of 10x Revenue. Another leading player in the space, Ping Identity, is expected to IPO later this year.

Cybersecurity, from growth equity raises to strategic exits, continues to generate great interest, making now an excellent time to be contemplating a fundraising, exit or growth through acquisition in the cybersecurity space – if you are, please do get in touch.

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Jay Nathwani

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