Cybersecurity investment rebounds as regulation, AI and cloud risks drive spend
After a muted 2023, capital is flowing back into cybersecurity as enterprises confront escalating breach costs, cloud complexity, and new disclosure rules. Investors are backing category leaders and platforms that consolidate tools, while boards reopen budgets for risk, resilience, and compliance.
A resilient market snaps back
In the Cyber Security sector, Cybersecurity spending is re-accelerating as boards recalibrate risk and resilience. Global security and risk management outlays are set to reach roughly $215 billion in 2024, up more than 14% year over year, according to a recent forecast from Gartner. The firm points to identity, cloud security, and managed services as the fastest-growing categories as enterprises rationalize tool sprawl and shift more workloads to public cloud according to recent research.
Underlying demand is being reinforced by the simple math of risk. The average cost of a data breach has climbed to nearly $5 million per incident globally, with longer dwell times and complex multi-cloud environments amplifying blast radius and recovery expenses, IBM’s annual analysis shows. That price tag—along with rising cyber insurance premiums and tighter underwriting—continues to justify proactive investments in detection, response, and hardening.
The public markets have taken note. Profitable, scaled security vendors focused on cloud, endpoint, and identity have outperformed broader software indices in recent quarters as customers consolidate around platforms with native AI, integrated telemetry, and strong free cash flow. That momentum is encouraging late-stage private companies to weigh IPOs after a two-year drought, even as investors remain selective on growth quality and unit economics.
Venture, growth, and M&A: Capital rotates to category leaders
In private markets, cybersecurity funding downshifted in 2023 alongside the broader venture pullback, but activity stabilized through 2024 with a tilt toward later-stage, revenue-efficient leaders. Mega-rounds resurfaced in cloud security, data protection, and identity as buyers sought scale, platform breadth, and go-to-market efficiency, industry reports show. Early-stage deal flow remains healthy in niches like OT/ICS security and AI model protection, though valuations have normalized.
Strategic M&A has also regained momentum. Large platforms, consolidators, and private equity sponsors are acquiring tuck-ins that close feature gaps in posture management, identity threat detection, and managed detection and response. Aggregate deal volumes and values rebounded from 2023 lows, with advisors noting a pipeline of carve-outs and take-privates as sellers adjust price expectations per the latest almanac.
...