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''' '' CYPHER ATTACKS
CYBER * '' '''
FOUNDER FRAMERS : RABO - DEE- HALEEMA- HUSSAIN- SALAR : '' ARE we well protected on The World Students Society? 'Salar, can you also pose this question to Google.' ''
''If we are not well protected, what do you all need?''
IN JANUARY - LACEWORK, A CLOUD SECURITY START-UP in San Jose, California, garnered $ 525 million in funding. Investors reached out because of Lancework's products, which use artificial intelligence to identify threats, said Andy Byron, the company's chief resource officer.
AS CYBERATTACKS PROLIFERATED THIS YEAR - SANJAY BERI, the chief executive of Netscape, a cloud security start-up got a phone call. Then an email. Then more messages. All were from venture capitalists who wanted to invest in the company.
Given the ransomware attacks and nation state hacks that were making headlines the world over, they told him companies that made security products had a bigger market and mission than before. ''We weren't looking for capital,'' said Mr. Beri, who founded Netskope in 2012, but the cyberattacks definitely increased the interest.''
After bids from seven investors, Netskope raised $300 million this month, giving the company a valuation of $7.5 billion, up from a $2.6 billion valuation last year. It was one of the year's largest cybersecurity funding rounds, but not the maximum that Netskope could have attained. '' We could have raised $1 billion in capital,'' Mr. Beri said.
Recent cyberattacks around the world have taken down operations at gasoline pipelines, hospitals and grocery chains and potentially compromised some intelligence agencies. But they have been a bonanza for one group :
CYBERSECURITY START-UPS
Investors have poured more than $12.2 billion into start-ups that sell products and services such as cloud security, identify verification and privacy protection so far this year.
That exceeds the $10.4 billion that security companies raised in all of 2020 and is more than double the $4.8 billion raised in 2016, according to the research firm PitchBook, which tracks funding. Since 2019, the rise in cybersecurity funding has outpaced the increase in overall funding.
The surge follows a series of high-profile ransomware attacks, including those against Colonial Pipeline, the software maker Kseya and the meat processor JBS.
When President Biden met with President Vladimir V. Putin of Russia last month, cyberattacks perpetrated by Russians were high on the diplomatic agenda. This month, the Biden administration and its allies also formally accused China of hacks.
The breaches have fueled concerns among companies and governments, leading to increased spending on security products. Worldwide spending on information security and related services is expected to reach $150 billion his year, up 12 percent from a year ago, according to the research company Gartner.
''Before we got tot his point, we as security teams were hacing to go and fight for every penny we could get, and now it's the exact opposite,'' said John Turner, an information security manager at LendingTree, the online lending marketplace. Executives, he said, are asking : ''Are we protected? What do you need?''
All of this is set to drive business for cybersecurity companies, creating a potential windfall that has excited investors. The average valuation of cybersecurity companies raising funds this year has more than doubled to $524.1 million from $221.8 million in 2020, according to PitchBook.
''In close to two decades as a V.C., I've never seen valuations so escalated,'' said Asheem Chandna, a venture capitalist in security companies such as Palo Alto Networks.
The funding frenzy has built on months. The pandemic has provided momentum when companies shifted to remote work, which Ventures, which led Lacework's January financing, had no problems getting other investors to participate, he said.
Mike Speiser, a venture capitalist at Sutter Hill, which led Lacework's January financing, had no problem getting other investors to participate. ''I called the five people that I thought were the best investors and asked them if they were interested. They were all interested, and within 48 hours we had a deal,'' Mr. Speiser said.
''One hundred percent of the people I called said they wanted in. We could have raised well over $1 billion.''
Business has boomed for Lacework because of '' the combination of all of these ransomware and nation-state attacks together with people moving to cloud so aggressively,'' said David Hatfield, who joined the start-up in February as chief executive.
Other security start-ups have also benefited. Orca, a cloud security start-up, raised $210 million in March. Trulioo, a company that makes users users are who they say they are when they join a platform, collected $394 million last month.
Security start-ups also also being acquired for large sums or going public. Last month, SentinelOne went public with market capitalization of over $10 billion, the highest-valued cybersecurity public offering. In May Auth0, an identity verification company, was bought by Okta, another security company, for $6.5 billion.
Mr. Beri of Netskope said that with cybersecurity threats mounting, the funding boom was likely to continue.
''Many investors are not security savvy,'' he said. '' But when your next door neighbors go, 'Hey, what's up with this ransomware stuff,' then you know that it's reached public consciousness. From an investor's perspective, when something hits the average person's mind, they realize : ''' WOW! This is here to stay.' ''
The Honor and Serving of the Latest Global Operational Research on Cyber threats, Security and Start-ups continue. The World Students Society thanks author Erin Woo.
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