Q1 marked lowest VC funding for safety in a decade, however there’s a silver lining 

Today, DataTribe launched a brand new report displaying enterprise capital exercise within the cybersecurity business dropped considerably in Q1 2023, following the collapse of Silicon Valley Bank. 

The report confirmed that though the cybersecurity business skilled a much less dramatic decline than the broader U.S. VC ecosystem, cybersecurity deal exercise in Q1 was at or close to decade lows, with a mean seed deal quantity of 21 in Q1 2023, in comparison with 20 in Q1 2015.

Likewise, year-over-year cybersecurity seed deal quantity was down 56%, from 48 offers to 21. Although, the report additionally famous that the seed-stage cybersecurity market remained “relatively bright,” with a median premoney valuation of $15.5 million, simply behind the all-time excessive of $15.8M in This fall 2022. 

The vibrant facet to decrease VC funding

While the general decline in VC seed funding seems to be a serious blow for the cybersecurity sector, the report argues that there’s an underlying silver lining: consolidation amongst answer suppliers. 

“Fewer companies receiving more funding at higher valuations is likely a good thing for the sector, particularly the enterprise CISO, [who] is already overwhelmed with vendors trying to sell the latest product,” the report stated. 

In an electronic mail interview with VentureBeat, John Funge, managing director at DataTribe, reaffirmed the report’s discovering and argued that “while the slowdown is painful in some cases, we see it as an overall healthy thing.” 

Funge instructed that bigger cybersecurity corporations will be capable to reap the benefits of the market setting to make acquisitions and consolidate options whereas weaker corporations battle to outlive. 

“The medium- to long-term benefit of this will be some rationalization of the highly-fragmented tech stacks that enterprises depend on,” Funge stated.

One firm that seems as an example this method is cloud safety supplier Wiz, which regardless of the financial slowdown, managed to boost a $300M sequence D funding spherical and a $10 billion premoney valuation for an answer that consolidates cloud safety posture administration (CSPM) and cloud-native utility safety platform (CNAPP) capabilities right into a single answer. 

If Funge and DataTribe are appropriate that an financial slowdown will encourage rationalization within the business, then it will seemingly be a net-positive for CISOs. They’ll have a possibility to scale back complexity all through their tech stack and reduce the general variety of instruments wanted to safe their organizations’ environments.