Investors are being drawn to the sector as global spending on security is likely to rise following the covid pandemic
Large-scale transition to remote work is behind a surge in investor interest in cybersecurity firms
Mumbai/New Delhi:With covid-19 and lockdowns around the world pushing enterprises to work remotely, investor interest in companies providing cybersecurity services has grown exponentially.
Last week, Chennai- and US-based cybersecurity startup Securden Inc. raised $1.2 million in a seed investment round led by Accel, with participation from Girish Mathrubootham, founder and CEO of Freshworks. Earlier in the year, threat intelligence startup Cyfirma raised an undisclosed amount from Z3 capital. In June, IT services firm Wipro Ltd invested in security company CloudKnox through its venture arm.
According to data from Venture Intelligence Research, cybersecurity startups in India raised $35 million in 2019 across six deals. There have been a few investment announcements in this space in 2020 but their funding details were not disclosed. Deals have been struck across services such as threat intelligence, information security, enterprise software as a service (SaaS) security and cloud security.
Investors are being attracted to the sector as global spending on security is expected to rise following the pandemic. According to Gartner Inc, the global information security market is forecast to grow at a five-year compound annual growth rate of 8.7% to $188.8 billion in 2023. The new spending will be driven by regulations and increased awareness as organizations’ needs evolve to address more complex threats.
In an interviewon 25 May, private equity investor Everstone Group’s co-founder Atul Kapur said cybersecurity is emerging as a major area of focus for investors.
“Within the IT services industry, another crucial area of focus is cybersecurity. As the companies put more of their data on cloud or engage more with their customers in a digital mode, the next leg of growth will come through cybersecurity," said Kapur.
Thanks to the pandemic, there is increased usage of mobile devices and remote access to core business systems where unprotected devices could lead to privacy breaches, as well as loss of data. So, it has become imperative for organizations to enable secure access to such a distributed workforce. Technologies such as virtual private networks (VPN), end-point security, identity and access management, cloud security, and application security have become increasingly relevant in the current context.
“There was a secular demand for cybersecurity solutions even before the covid-19-induced lockdowns, and the transition has significantly enhanced investor interest. In the recent past, there have been a slew of cybersecurity deals announced across the cross section of private equity, strategic investors, and corporate venture funds," said P.N. Sudarshan, partner, Deloitte India. He said more such transactions will be seen in sectors such as cybersecurity, cloud, and data centres that have been positively impacted by the large-scale transition to remote work.
As organizations establish processes to operate in the new normal, having a robust cyber environment will be a top priority for the board and senior executives, said Atul Gupta, partner, IT advisory and cybersecurity leader, KPMG, in India. “Key areas from the cyber perspective in the current scenario include managing cyber hygiene in a remote working environment, ensuring security hygiene on end points and remote connectivity, establishing trusted identity environment including zero trust architecture principles and managing security in hybrid environment through workloads distributed across on-premise and cloud," said Gupta.
According to data from job website Indeed, postings for cybersecurity-related jobs have increased by 6% during February-May 2020. During the same period, searches for these roles grew by 30%.
With security concerns rising amid India-China border tensions, the need for cybersecurity in telecom and electronics space has become even more necessary.
Recently, telecom minister ant IT Ravi Shankar Prasad said India faces the challenge of deploying “security architecture" for the roll-out of 5G. A national implementation of 5G will require robust infrastructure and involve higher cost. Growth in the domestic e-commerce market and increasing use of disruptive technologies have already shown that the country needs to step up its cybersecurity solutions investments.
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