Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Threat Intelligence

7/25/2018
03:30 PM
Ofer Schreiber
Ofer Schreiber
Commentary
Connect Directly
Twitter
LinkedIn
RSS
E-Mail vvv
100%
0%

The Good & Bad News About Today's Cybersecurity Investment Landscape

Lots of things keep CISOs up at night. But instead of guessing what CISOs want, investors and vendors should incorporate customer feedback throughout product ideation and development cycles.

The global cybersecurity market is currently valued at over $120 billion, up from just $3.5 billion in 2004, and the dollar amount of cybersecurity venture capital investment has grown 12 times in response. Over the past decade, the number of cybersecurity vendors has grown 23 times, an overabundance on the supply side that has complicated the marketplace and spooked less-committed, more-traditional investors. With competition high and differentiation low, backing new ventures presents much greater risk. Startups are finding it difficult to stand out. CISOs can be overwhelmed by the flood of new options.

Now the good news: Today's market dislocations present openings for those with foresight. More noise in the market doesn't change the fact that the signal (i.e., the number of opportunities on an annual basis) is still the same or growing. Increased competition historically has pushed markets to improve, and there's no reason to believe the current case is any different. Security teams that understand the market and openly communicate and align their efforts with the right partners can capitalize on the resulting growth. But first they have to understand the changing landscape.

Cybersecurity Increasingly Specialized
Much of the recent discussion surrounding cybersecurity, both optimistic and pessimistic, speaks about the industry in monolithic terms. This is reminiscent of how people spoke about the Internet 20 years ago. The reality now, as then, is far more complex. Stakeholders who simply focus on cybersecurity are likely not focused enough.

Cybersecurity has fragmented into a fractal of hypertechnical specialties and subspecialties. From a high level, each offshoot might blend indistinguishably into the overall landscape. But a deeper perspective reveals highly differentiated underlying patterns. Developing deep industry expertise and granular technical knowledge is the only way to evaluate opportunities at their appropriate depth and is the crucial first step to successfully filtering the signal from the noise.

Solving a Problem Is No Longer Enough
For better or worse, cybersecurity is a game of cat and mouse. According to Momentum Cyber, the number of threat types has gone from fewer than 50 to more than 1 million since 2007. And Cybersecurity Ventures predicts cybercrime damages will cost the world $6 trillion annually by 2021, up from $3 trillion in 2015. There is no shortage of problems desperately in need of solving.

The recent flurry of cybersecurity vendors has largely sought to combat this explosion of threats in a piecemeal, reactive way. However, such an approach is unsustainable, and a sea change is brewing. CISOs are feeling overwhelmed by the onslaught of "me-too" vendors and are seeking to simplify. According to research by Cisco, companies currently have up to 70 different security vendors installed and 62% are actively consolidating their security stack as a result.

For vendors, simply solving a problem is no longer enough. Unless a new technology either helps CISOs solve an unaddressed or imminent, high-priority problem or better utilize and operationalize their existing security stack, it won't even register on their radar. Meeting either of these criteria requires both a workable technical solution and a viable market opportunity. Validating an idea or product along both of these dimensions requires extensive due diligence, technical expertise, and active engagement with customers.

CISOs Getting a Say in Product Development
There are a lot of things reportedly keeping CISOs up at night. But few articles on this topic are actually written by CISOs themselves. Instead of simply guessing what CISOs want, investors and vendors should incorporate customer feedback throughout product ideation and development cycles.

Cultivating and tapping a network of knowledgeable customers produces a powerful, virtuous cycle. Entrepreneurs and investors receive feedback that will both improve their product and maximize its chances of success. And CISOs, by virtue of participating, get access to a pre-vetted and decluttered sampling of promising vendors tackling relevant problems. Being a part of the product development process also allows CISOs to give voice to specific concerns other startups might have missed or that larger vendors have not properly addressed. Even high-profile CISOs have proven surprisingly willing to volunteer their time and expertise, illustrating the potential for innovative approaches to produce mutually beneficial relationships that improve the overall cybersecurity ecosystem.

High-Conviction, Value-Add Investment Is the New Standard
Cybersecurity is a complex, dynamic, and crowded market. Even the strongest products and brightest teams will need strategic, operational support until they gain their own momentum. Luckily, much of the expertise and skills that drive the investment process can be easily redirected toward amplifying the early efforts of founding teams. Whether it means fostering industry relationships to help guide business development, committing intelligence capabilities to analyze competition, or offering technical knowledge to facilitate product growth, investors should dedicate all resources possible to helping their portfolio teams succeed.

For their part, entrepreneurs should seek out partners capable of providing extensive, ongoing value-add support services and actively facilitating connections daily to potential customers. For example, our firm's network advisory board, comprised of corporate CISOs, meets prospective cybersecurity startups almost every day.

Cybersecurity is an industry still brimming with potential. However, capitalizing on that potential requires deep knowledge and high conviction. The current, crowded marketplace presents new pitfalls for less-sophisticated players. But those committed and careful enough to sidestep these challenges can reap outsize rewards. Investors, startups, and CISOs who appreciate the industry's complexity, anticipate the market's needs, and prioritize strategic collaboration will be poised to win big in the rapidly changing cybersecurity landscape.

Related Content:

Learn from the industry's most knowledgeable CISOs and IT security experts in a setting that is conducive to interaction and conversation. Register before July 27 and save $700! Click for more info

Ofer Schreiber is a partner, at YL Ventures, which invests early in cybersecurity, cloud computing, big data, and software-as-a-service software companies, and accelerates their evolution via strategic advice and Silicon Valley-based operational execution. Ofer Schreiber has ... View Full Bio
 

Recommended Reading:

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Commentary
Ransomware Is Not the Problem
Adam Shostack, Consultant, Entrepreneur, Technologist, Game Designer,  6/9/2021
Edge-DRsplash-11-edge-ask-the-experts
How Can I Test the Security of My Home-Office Employees' Routers?
John Bock, Senior Research Scientist,  6/7/2021
News
New Ransomware Group Claiming Connection to REvil Gang Surfaces
Jai Vijayan, Contributing Writer,  6/10/2021
Register for Dark Reading Newsletters
White Papers
Video
Cartoon
Current Issue
The State of Cybersecurity Incident Response
In this report learn how enterprises are building their incident response teams and processes, how they research potential compromises, how they respond to new breaches, and what tools and processes they use to remediate problems and improve their cyber defenses for the future.
Flash Poll
How Enterprises are Developing Secure Applications
How Enterprises are Developing Secure Applications
Recent breaches of third-party apps are driving many organizations to think harder about the security of their off-the-shelf software as they continue to move left in secure software development practices.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2021-0532
PUBLISHED: 2021-06-21
In memory management driver, there is a possible memory corruption due to a race condition. This could lead to local escalation of privilege with no additional execution privileges needed. User interaction is not needed for exploitation.Product: AndroidVersions: Android SoCAndroid ID: A-185196177
CVE-2021-0533
PUBLISHED: 2021-06-21
In memory management driver, there is a possible memory corruption due to a race condition. This could lead to local escalation of privilege with no additional execution privileges needed. User interaction is not needed for exploitation.Product: AndroidVersions: Android SoCAndroid ID: A-185193932
CVE-2021-26461
PUBLISHED: 2021-06-21
Apache Nuttx Versions prior to 10.1.0 are vulnerable to integer wrap-around in functions malloc, realloc and memalign. This improper memory assignment can lead to arbitrary memory allocation, resulting in unexpected behavior such as a crash or a remote code injection/execution.
CVE-2021-0478
PUBLISHED: 2021-06-21
In updateDrawable of StatusBarIconView.java, there is a possible permission bypass due to an uncaught exception. This could lead to local escalation of privilege by running foreground services without notifying the user, with User execution privileges needed. User interaction is not needed for explo...
CVE-2021-0504
PUBLISHED: 2021-06-21
In avrc_pars_browse_rsp of avrc_pars_ct.cc, there is a possible out of bounds read due to a missing bounds check. This could lead to remote information disclosure over Bluetooth with no additional execution privileges needed. User interaction is not needed for exploitation.Product: AndroidVersions: ...