Cyber security is never far from the headlines. From high-profile corporate hacking to consumer and payment protection, the sector generates huge interest, and indeed, high-growth potential. The UK government recently announced £1.9 billion of investment over the next 5 years in the sector, with the European Commission also committing significant cash to the cause.
Investors are clearly aware of the growing importance of security to business. Just last week, we saw a high-value fundraising from Cambridge University spin-out Darktrace, who raised $65m from a variety of investors including KKR, SB ISAT, Summit Partners and Ten Eleven Ventures.
Our Research team have calculated that this deal values the young company at almost £130m – quite a valuation for a business only registered in June 2013. This shows over a doubling in value in the space of 12 months – from a previous valuation of £58.7m.
We track a significant amount of companies and investment in the digital security space. We’ve seen over £250m invested in the last 5 years, with the average valuation per company at around £6.5m, showing clear health in the sector. The majority of these are still classified as seed-stage, but a large proportion have advanced into venture-stage.
Interestingly, well over half of the deals we’ve seen in this sector have been unannounced – potentially pointing to a desire for security-conscious investors and entrepreneurs alike to keep activity relatively under-the-radar.
We’re closely tracking many other high-growth companies in the space:
Digital Shadows – a growth-stage company, developed a suite of online security tools with backers including Paladin Capital, Passion Capital and Trinity Ventures. They raised $14m in February this year, valuing them at over £74m.
Post-Quantum, a venture-stage business, provides cryptography and data loss prevention to clients including Barclays, Nato and the UK Government. Our Research team found that they raised £340k in July 2015, valuing the ambitious business at around £12m. They recently raised another £8m for Research and Development from AM Partners and VMS Investment group.