Data Breaches Boost Funding for Cybersecurity Startups
In the 2015 first half, venture firms invested $1.2 billion in cybersecurity startups, according to researcher CB Insights. That is down slightly from $1.4 billion a year earlier but up sharply from $771 million in 2013’s first half.
The shift is particularly notable at Andreessen Horowitz, which used to view security companies as necessary for Internet safety but less lucrative than other technology niches.
One reason is that cybersecurity startups were often acquired prior to an initial public offering, says Scott Weiss, an Andreessen Horowitz partner. Mr. Weiss sold his own security startup, IronPort Systems Inc., to Cisco Systems Inc. for $830 million in 2007.
Well-received offerings from companies including Palo Alto Networks Inc. in 2012 and FireEye Inc. in 2013 have altered that view. Partners at Andreessen Horowitz say they likely wouldn’t have invested in a company like Keybase even two years ago. Over the past 13 months, the firm also made an unusually large $142 million bet on Tanium Inc., which tries to make it easier for companies to find vulnerable and infected machines on their networks.
Adapted from WSJ