2021 may have been a rough year for cybersecurity, but it was a record-breaking year for security startups.
According to new data from Momentum Cyber, a financial advisory firm for the security industry, cybersecurity startups raised a “record-shattering” $29.5 billion in venture capital last year, more than doubling the $12 billion raised in 2020 and outpacing the two previous years combined.
Investors poured this record amount of financing into more than 1,000 deals, of which 84 were greater than $100 million. This includes the $200 million Series D investment secured by industrial cybersecurity startup Dragos, Claroty’s $140 million pre-IPO raise and the $543 million Series A raised by passwordless authentication company Transmit Security. Total financing value was up 138% over the previous year, Momentum’s data reveals.
As a result of this historic investment volume — which Momentum says is driven by a spur of innovation in the industry and the pandemic-fueled explosion in cyber threats — a record number of security startups were minted as unicorns in 2021. More than 30 startups achieved $1 billion-plus valuations, including the likes of Wiz, Noname Security and LaceWork, compared to just six startups the previous year.
Likewise, total M&A volume soared to over three times what it was in 2020, with $77.5 billion in deals in 2021 across 286 transactions. This is up from $19.7 billion in 2020 across 178 transactions. Momentum’s data shows over a dozen of these deals were valued at greater than $1 billion, including Advent’s $14.1 billion acquisition of McAfee, Proofpoint’s $12.3 billion acquisition by Thoma Bravo, Avast and NortonLifelock’s $8 billion merger and Auth0’s $6.4 billion acquisition by Okta.
Such growth reflects what Dave DeWalt, founder and managing director, Momentum Cyber and NightDragon Security calls a “golden age of cyber,” and it’s unlikely to slow down any time soon. Momentum says the industry is preparing for an “even bigger” 2022 as a result of the growing threat landscape.
