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CyberScope – Q2 2019 Market Review

By Jay Nathwani 16 Jul 2019

Welcome to the Q2 2019 edition of the CyberScope – Results International’s market update for the global cybersecurity sector.

Highlights in the quarter:

  • Prevention: Further momentum in generating a ‘human firewall’ – training employees well enough to keep the network secure – as 95%(1) of organisations identify a gap between their current and desired organisational security culture in response to the specific threat of data loss
    • Knowbe4 (security awareness training against phishing and data breaches) reached ‘unicorn’ status with $300m funding from KKR, just three months since the PE house invested an initial $50m. Knowbe4 also acquired Norway-based Ctrle (organisation maintenance and improvement of security posture and culture) between raises
  • Protection: A strong resurgence in IPO activity saw endpoint protection platform, Crowdstrike, and network security policy management firm, Tufin, both list
    • Crowdstrike scaled rapidly in its eight-year lifetime, fuelled by nearly $500m in raised capital, and listed in mid-June at a significantly higher price ($34) than the indicated range ($19-23), valuing the business at over $6bn. By the end of the month, public market appetite had doubled the share price and valued the business at more than $15bn, (nearly 40x forward CY2019 revenue)
    • 15-year-old Tufin, a relatively lower profile IPO, also performed strongly. Its valuation since IPO tripled by the end of the quarter, forging a different, more self-sufficient route to market, having only raised $30m prior
  • Detection & Response: A renewed focus of security operations centres (SOCs) on threat detection and response tools (vs. just prevention); Gartner now predicts that by 2022, 50% of all SOCs will transform to integrate incident response, threat intelligence and threat hunting capabilities into one, up from less than 10% in 2015. These tools are generating significant investor and strategic appetite:
    • Fundraisings: managed service providers Red Canary ($34m), Expel ($40m), Blue Voyant ($83m) and Digital Guardian ($30m) all raised significant funds in the quarter
    • M&A: Sophos acquired Rook Security (for an undisclosed amount), Insight acquired Recorded Future (for $780m) and Elastic acquired Endgame (for $234m)
  • Services: Significant cybersecurity services consolidation across Europe; Orange acquired Netherlands-based SecureLink (following its acquisition of UK-based SecureData last quarter) and Swisscom acquired its direct domestic competitor, United Security Providers. In the US, growth equity firm Sunstone Partners merged three of the leading managed security service providers to form Avertium to serve 1,200 mid-large enterprises

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.

Jay Nathwani

Associate

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