Cybersecurity funding up by 50%

Overall cyber security start-up funding since lockdown increased by 52 per cent year-on-year - in contrast to the 10 per cent decrease across all UK tech sectors.

However, investment in UK cyber security start-ups is dominated by later stage firms, as companies raising capital for the first time fell by 96 per cent.

British cyber security start-ups raised £651m last year after the start of lockdown in March, but only £11.9 million went to companies looking to raise investment for the first time, according to research released by Plexal and Beauhurst.

General investor caution was offset by the need for solutions to address the security challenges arising from the pandemic.

“But while investors clearly saw the value in proven businesses capable of meeting these challenges, they remain hesitant to commit significant funding to those without existing backing,” said innovation centre and workspace Plexal and start-up database Beauhurst.

The pair analysed nearly 40,000 start-ups and fast-growth businesses to understand investment activity among the cyber security sector since UK lockdown began on 23 March 2020.

The total number of deals involving cyber security start-ups increased by 33 per cent year-on-year.

In contrast, deal numbers across all sectors were 26 per cent lower during lockdown compared to 2019.

Cyber security funding was dominated by a few very large follow-on investments such as OneTrust (£224 million), Snyk (£154 million) and Privitar (£70 million). This confirms that despite the total funding boost, it is select scaleups with a proven track record that have prospered, rather than the broader UK cyber sector.

Early-stage firms only secured £11.9 million across 13 deals since the beginning of lockdown, compared to £265 million across nine deals in the same period in 2019 - a 96 per cent decrease.

Only 23 cyber security start-ups entered administration, liquidation or dissolution since 23 March 2020, compared with a total of 1,715 across all sectors.

Saj Huq, director of innovation at Plexal, said: “While increased total funding demonstrates the relevance of cyber security and shows that the UK’s cyber industry has not been impacted to the same extent as others, the almost complete absence of backing for early-stage firms puts the sector’s future at risk.

“It is these companies that we will ultimately rely on to solve the inevitable new cyber challenges arising from a society that is increasingly digital-first.”

Plexal's innovation and co-working space is located at London’s Queen Elizabeth Olympic Park, and was appointed by the Department for Digital, Culture, Media & Sport to deliver the London Office for Rapid Cybersecurity Advancement (LORCA), an innovation programme aimed at scaling cyber security solutions that are needed most by industry.

    Share Story:

Recent Stories