Highlights:

  • Seed and Series A rounds comprised the majority of investment rounds in the second quarter, accounting for 55% of total funding.
  • While making up 13% of deals in the second quarter, later-stage deals—which include growth capital and Series C and higher agreements—accounted for 65% of all funding during that time.

A recent report by cybersecurity recruitment firm Pinpoint Search Group reveals that cybersecurity funding surged in Q2 following substantial industry changes over the past year.

In the second quarter, 120 cybersecurity-related transactions totaling USD 3.3 billion from 98 fundraising rounds and 22 mergers and acquisitions were documented by Pinpoint’s research team. While there was only a single increase in transactions compared to the second quarter of 2023, funding increased by 71% from USD 1.9 billion.

It should be noted that Wiz Inc.’s USD one million fundraising in May distorted the second quarter of this year’s figures. With Wiz excluded, total capital raised was a much lower 21%, yet it was still a respectable growth rate for the industry.

Seed and Series A rounds comprised the majority of investment rounds in the second quarter, accounting for 55% of total funding. According to the survey, increasing investor interest in emerging businesses is a sign of increased trust in new suppliers to handle present and future business issues.

Naturally, some of the increased interest in new cybersecurity businesses is being driven by artificial intelligence; Pinpoint notes that concerns about threats powered by AI are becoming more and more pressing. In 2024, seed rounds will still make up 42% of all monitored rounds, as they did the year before.

While making up 13% of deals in the second quarter, later-stage deals—which include growth capital and Series C and higher agreements—accounted for 65% of all funding during that time. Due to their growing stakes in well-known security vendors seeking to diversify into new markets and enhance their product offerings, investors became more interested in late-stage rounds.

Mark Sasson, Founder and Managing Partner at Pinpoint Search Group, mentioned, “The upward trend in funding year over year is not easily explained. Last year was a challenging year economically, likely contributing to the dip in cybersecurity funding we experienced throughout 2023. Additionally, there has been growing evidence of an industry reset, with investors spreading their funding dollars among new technologies designed to address the IT threat landscape of tomorrow, including AI, crypto and automation.”

The encouraging figures for cybersecurity investment follow a study published on July 3 by PitchBook, which indicated that venture capital funding globally remained weak in the second quarter. While total transaction activity in the U.S. improved during the quarter on a count basis, corporations are being forced back into a less forgiving market due to an extended exit slowdown.