5 top VCs reveal the favorite cybersecurity startups in their portfolios, after investors pumped a record $7.8 billion into the industry last year

Investors Rebecca Gevalt and Arun Mathew

Summary List Placement

The cybersecurity market is booming like few other sectors of investing. Venture capitalists poured more than $7.8 billion into the cybersecurity industry globally in 2020, setting a new record. PitchBook, the startup analyst company, estimated the overall value of cybersecurity startups in 2020 at $148.2 billion, and projected that figure to swell to $206.9 billion by 2024. 

Yet the geeky, highly technical industry, aswirl with hype and jargon as big hacks make headlines, can be tough for outsiders to make sense of. That means they may miss out as investors rush to get in on the ground floor of a crop of new startups. And they are rushing.

Investors are vying to make early deals with emerging startups — 45% of the investments made in cybersecurity in 2020 went to angel, seed, and early-stage rounds, compared to 35% of the investments in the overall market, according to startup database Crunchbase. 

But where will that growth happen? PitchBook sees trends in automated tools that hunt down hackers, security for “edge computing” in cloud servers that are physically closer to where users are, and developer security building safer code to prevent security issues. 

Those big trends are good to know, but we wanted to see where investors put their own cash.

Insider spoke with five investors in cybersecurity to get their thoughts on the sector, top trends, and the startups in their portfolios that they particularly like. Below are the investing tips of Ted Schlein of Kleiner Perkins, Rebecca Gevalt of Dcode Capital, Oren Yunger of GGV Capital, Thomas Krane of Insight Partners, and Arun Mathew of Accel Partners. 

Ted Schlein, Kleiner Perkins

Schlein has been an executive and investor in cybersecurity for 35 years, investing in LifeLock, Mandiant, and Carbon Black – all acquired by bigger firms over the years. Asked why he still invests in security startups, he says “Because everyone wants to feel safe, always.”

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At the legendary venture capital firm Kleiner Perkins, Schlein says that even the biggest names in tech are keenly interested in cybersecurity in a way they hadn’t been before.

“Boards of directors are now a major part of the cybersecurity discussion, and when that happens, budgets tend to increase,” he said.

Big cyberattacks are front-page news today, Schlein says, and that has raised the profile of the industry. “Major corporations feel exposed as they are hacked by nation-states,” he says. “Consumers read every day about how their credentials or credit card information has been stolen. Cyber is now in mainstream consciousness.”

Schlein says cloud security is a major trend, especially “how to fill in the gaps that the major cloud providers don’t offer.” On the heels of the SolarWinds and Microsoft Exchange attacks, he believes “know your supply chain” will become a mantra and security philosophy. “Understanding in detail the risks that a company has throughout their supply chain” will be crucial, he believes.  

Here are Schlein’s favorite cybersecurity startups from his portfolio:

IronNet Cybersecurity provides a system that can analyze huge amounts of data about cybersecurity threats and take the appropriate …read more

Source:: Business Insider – Tech

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