Q1 marked lowest VC funding for safety in a decade, however there’s a silver lining 

In the present day, DataTribe launched a brand new report exhibiting enterprise capital exercise within the cybersecurity trade dropped considerably in Q1 2023, following the collapse of Silicon Valley Financial institution. 

The report confirmed that though the cybersecurity trade skilled a much less dramatic decline than the broader U.S. VC ecosystem, cybersecurity deal exercise in Q1 was at or close to decade lows, with a median seed deal quantity of 21 in Q1 2023, in comparison with 20 in Q1 2015.

Likewise, year-over-year cybersecurity seed deal quantity was down 56%, from 48 offers to 21. Though, the report additionally famous that the seed-stage cybersecurity market remained “comparatively vibrant,” with a median premoney valuation of $15.5 million, simply behind the all-time excessive of $15.8M in This autumn 2022. 

The intense facet to decrease VC funding

Whereas the general decline in VC seed funding seems to be a significant blow for the cybersecurity sector, the report argues that there’s an underlying silver lining: consolidation amongst answer suppliers. 

“Fewer firms receiving extra funding at larger valuations is probably going factor for the sector, notably the enterprise CISO, [who] is already overwhelmed with distributors attempting to promote the most recent product,” the report stated. 

In an e-mail interview with VentureBeat, John Funge, managing director at DataTribe, reaffirmed the report’s discovering and argued that “whereas the slowdown is painful in some circumstances, we see it as an total wholesome factor.” 

Funge advised that bigger cybersecurity firms will be capable of benefit from the market surroundings to make acquisitions and consolidate options whereas weaker firms wrestle to outlive. 

“The medium- to long-term advantage of this can be some rationalization of the highly-fragmented tech stacks that enterprises depend upon,” Funge stated.

One firm that seems for instance this method is cloud safety supplier Wiz, which regardless of the financial slowdown, managed to boost a $300M collection D funding spherical and a $10 billion premoney valuation for an answer that consolidates cloud safety posture administration (CSPM) and cloud-native software safety platform (CNAPP) capabilities right into a single answer. 

If Funge and DataTribe are right that an financial slowdown will encourage rationalization within the trade, then this may possible be a net-positive for CISOs. They’ll have a possibility to cut back complexity all through their tech stack and reduce the general variety of instruments wanted to safe their organizations’ environments.