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Investment in cyber security start-ups is set to explode. Because fish tanks.

Investment in cyber security startups set to explode

You need only to read the news to know that cyber attacks are on the rise – from the ransomware attack that crippled computers and institutions across the globe last spring to hackers stealing and divulging the latest Game of Thrones plot twist this summer. As our professional and personal lives become inextricably embedded in technology, everyone – including companies, organisations, and individuals – has not only become more vulnerable to security breaches, but more susceptible, as well.

The impact of such attacks cannot be underestimated, and they are on the rise. According to Reuteurs, the European Commission is due to release a report on the estimated impact of cybercrime across the EU (spoiler alert: incidents rose fivefold between 2013 and 2017 and could rise another four times by 2019. Europol puts these losses at 265 billion euros per year). 

As a result, the Commission’s report will also detail a list of measures to combat these attacks. Safeguards, diplomacy, and law enforcement cooperation are all on the table, but investment in new cyber security technologies will have a significant role to play. The report calls for a short-term injection of additional EU spending to achieve both a critical mass of investment and overcome fragmentation within the region, calling a previous 2016 plan to spend 1.8 billion euros ($2.1 billion) by 2020 a ‘first step’,” reports Reuters.

But where should this investment go?

 

Start-ups, of course.

The EU is not the first to look to start-ups to address larger and emerging cyber security concerns. Just one example can be taken from the UK intelligence agency GCHQ, who announced earlier this year it was sponsoring an accelerator for cyber security start-ups. “The UK government has ramped up its investment in cyber defences and increasingly turned to the private sector for ideas,” reports the Financial Times. 

The EC will no doubt benefit from millions already invested in cyber security start-ups. According to CB Insights, last year, investors put $3.5 billion into cyber security companies via more than 400 deals, with six cyber security start-ups raising $100M+ mega-rounds in the second quarter of 2017.

But what are some of the trends in cyber security garnering such vast investment sums?

 

Machine learning

Artificial intelligence, unsurprisingly, is central to many cyber security solutions. Start-ups such as Darktrace – who raised $75m in the second quarter of 2017 – are leveraging AI to identify and respond to real-time threats. Darktrace’s Enterprise Immune System is modelled on the human immune system, learning what is “normal” within an organisation and neutralising “outliers”.  CheckRecipient – which raised $2.5m – uses machine learning to “prevent highly sensitive emails being sent to the wrong person.”

 

Privacy

Consumer data is collected with nearly every move we make, and there is little more damaging to a brand than to have its customer data comprised and exploited. Privitar raised $16m to market its patented privacy software, which protects data while enabling organisations to study and analyse information to improve products and services.

 

User authentication

An essential component of protecting against threats is user authentication. VS Enterprises has developed a technology that allows genuine users to authenticate themselves across a number of different online transactions. The start-up raised $14.7m in the first half of this year. Callsign raised $35m for its trademarked authentication system, which intelligently applies authentication methods based on situation, device, location, and behaviour analytics.

 

Is it necessary for so many start-ups to achieve such staggering investment numbers? 

The short answer is yes. Blame the Internet of Things. Blame the vulnerabilities created by global dependence on technology. From home entertainment systems to energy grids, from single hackers to state-sponsored teams, with each new emerging technology comes new risks. Who would have thought that Amazon Alexa could be manipulated and used to listen in on conversations, or that a fish tank could be hacked to steal data from a casino?

 

Interested in raising funding? Get in touch ➤

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Gayle O’Brien

Written by Gayle O’Brien

Gayle O’Brien started her writing career during Web 1.0 and still appears to be standing. After multiple stints in-house and agency side, her writing now focuses on start-ups, technology, and innovation. A dual citizen of the US and UK, Gayle divides her time between Massachusetts and south-east England.