Cyber winds ༄༄

Cybersecurity and infrastructure software trends, supported by 33N ventures

Fig 1. 33N’s Carlos and Gonçalo.

While the market never stops, at 33N we took some time during the low season to reflect on the main trends of the cyber funding landscape at seed and series A stages, both in Europe as well as internationally. Some interesting conclusions!

Overall cybersecurity hasn’t been totally immune to the global decrease in VC funding, with a decrease in both deal volume and value in 2023 and expected to continue into 2024. While Europe secured a 20-25% share in deal value and volume in 2022-23, respectively, its share reduced to below 20% in 2024 so far. This data doesn’t consider unannounced extension rounds (often in the form of convertible note or SAFE) which volume is unknown and could easily correct the downward trend (our perception is that 2023 saw a lot of extensions).

On a per country perspective, while the UK continues to be the leading market in deal volume and value, it is now closely followed by France. While the French ecosystem has seen increased maturity in the launch of AI startups (think Mistral, Hugging Face, H company), France seems to be also becoming a reference market in Europe for cybersecurity.

Fig. 1. Funding evolution across stage and geography.

Looking into the activity of selected cybersecurity-focused VC funds at seed, series A and B stages, deal value and volume of 2024 to date is on-par with the levels of 2023, suggesting healthy opportunities (again, excluding unannounced extension rounds).

From a market segment perspective, 4 segments concentrated 68% of investment volume: Security Operations (29%), Cloud (17%), Identity (12%) and AI security (10%). Within those, Vulnerability management in SecOps and CNAPP continue to be the leading sub-segments. While the first 3 categories are not unexpected and align well with the areas of interest by enterprise CISOs, AI security is the new category riding on the emerging adoption of GenAI use cases. Considering the still early adoption of these in enterprise, it’s impressive to already see significant deal volume at Seed, Series A and B.

Fig. 2. Funding from selected cybersecurity VCs.

If we look to earlier stage, to acceleration and pre-seed stages, we see similar (or even more expressive) trend. Considering some the reference cyber accelerators (inc. AWS&Crowdstrike, Google cyber growth – with whom 33N is closely involved) the main segments include SecOps (24%), Cloud security (19%) and AI security (15%), the latter becoming the 3^rd most relevant category. While AI security can cover different topics, the 2 largest categories include Application (think AI firewalls, detection&response, red teaming, model scanning/monitoring, etc) and Data (data leakage protection, PII identification, etc) reflecting emerging categories of security concerns.

Fig. 3. Startups from leading cyber accelerators.

Overall, these trends reflect increased market interest in maturing but yet fragmented segments (SecOps, Cloud security, Identity) but strong emerging ones (AI security) which should continue to lock the interest of investors, executives and founders alike. At 33N we’ve deeply researched these and found unique approaches and best practices that we’d be glad to continue sharing.

If you’re building in these spaces, don’t hesitate to reach-out!

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33N Company Updates 🚀

Starting with this newsletter edition, we’re inaugurating a new section covering interesting updates from supported portfolio companies – if you’re interested to learn more please reach-out.

• Partners with Logic Technology B.V. to Strengthen IoT Security 👉 Read more

• Publishes CRA Guide and Requirements 👉 Read more

• Publishes “Ensuring Security for IoT-Enabled Vehicles”: 👉 Read more

• Releases new customer story with ClearBank 👉 Read more

• Recognized as leader The Forrester Wave™: Cybersecurity Risk Rating Platforms, Q2 2024 👉 Read more

• Partners with The Instillery to bring AI-powered security to New Zealand 👉 Read more

• Releases webinar on “Debunking AI Myths: Why SOC Leaders Need to Know About AI in Cybersecurity” 👉 Read more

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Upcoming Events for 33N 🤝

Please reach-out if you’re around!

• Big Data LDN, 18-19 Sep, London — Margarida & Pedro

• Bits & Pretzels, 29 Sep - 1Oct, Munich — Pedro

• One conference, 1-2Oct, The Hague — Gonçalo

• ECSO Cyber Investor Days, 3 Oct, The Hague — Gonçalo

• Gitex, 14-18Oct, Dubai — Carlos & Carlos

• ENISE, 21-23 Oct, León — Margarida & Carlos M.

• IT-SA, 22-24 Oct, Nuremberg — Gonçalo

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