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Security: Venture Capital Flows to Security Startups in 2019

By Dick Weisinger

Where are venture capitalists investing their dollars in 2019? With the avalanche of breaches and security issues in 2018, security is now a hot area for startup investments.

Thomas Weithman, managing director of CIT GAP Funds, said that “we expect strong continued funding for cybersecurity in 2019, with valuations at the seed and early stage remaining relatively constant for true startups, but rapidly increasing as firms show traction. We think hot spaces for VC investment will include security for IoT, endpoint, authentication, and orchestration/automated incident response, as well as solutions driven by and for the cloud.”

VC investments into security have been increasing rapidly over the last few years. In 2018, VCs invested $5.3 billion into security, compared to $4.4 billion in 2017, according to Strategic Cyber Ventures. There were 332 cybersecurity VC funding deals in 2018 with an average size of $15.8 million.

Ron Gula, president and co-founder, Gula Tech Adventures, said that “as an investor, the concept of ‛hot’ often leads to a market being flooded with similar products. It would be easy to say that AI, IoT, and cloud are hot areas, but the reality is that there are so many cyber tech vendors innovating and iterating across the entire tech spectrum, some feel it is saturated.”

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