Cybersecurity start-ups facing headwinds
Crunchbase data suggests funding to cybersecurity start-ups sputtered in recent quarters, while the main exit avenue for start-ups and investors also has been narrowing.
It might not be the best of times to exit a cybersecurity start-up. At least, that appears to be the conclusion of Chris Metinko in this recent article for Crunchbase News.
“Just as funding has sputtered to cybersecurity start-ups in recent quarters, the main exit avenue for start-ups and investors also has been narrowing,” he writes. “M&A (mergers and acquisitions) deal-making in the cybersecurity space continues to slow with only 13 deals announced for VC-backed start-ups in the first quarter of the year, per Crunchbase data.”
The deal count represents a 58 percent decline from this period in 2022 when 31 VC-backed companies were snapped up by strategics and private equity in Q1. The year-to-date numbers also put M&A deal-making on pace to have its slowest year since 2017 — when only 52 VC-backed cyber start-ups were snapped up by acquirers.
Metinko continues with this observation: “The simultaneous drop in funding and deal-making is important to note because it begs the question: What will cyber start-ups do when their cash runways end? Many start-ups are likely facing that dilemma right now. While they may still have money after raising significant sums in the salad days of 2021 and even early 2022, that cash is probably drying up. They also likely have inflated valuations that make a sale a no-go for would-be acquirers.”
