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
Oldest First  |  Newest First  |  Threaded View
Commentary
How SolarWinds Busted Up Our Assumptions About Code Signing
Dr. Jethro Beekman, Technical Director,  3/3/2021
News
'ObliqueRAT' Now Hides Behind Images on Compromised Websites
Jai Vijayan, Contributing Writer,  3/2/2021
News
Attackers Turn Struggling Software Projects Into Trojan Horses
Robert Lemos, Contributing Writer,  2/26/2021
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win an Amazon Gift Card! Click Here
Latest Comment: This comment is waiting for review by our moderators.
Current Issue
2021 Top Enterprise IT Trends
We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you today!
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-2021-21360
PUBLISHED: 2021-03-09
Products.GenericSetup is a mini-framework for expressing the configured state of a Zope Site as a set of filesystem artifacts. In Products.GenericSetup before version 2.1.1 there is an information disclosure vulnerability - anonymous visitors may view log and snapshot files generated by the Generic ...
CVE-2021-21361
PUBLISHED: 2021-03-09
The `com.bmuschko:gradle-vagrant-plugin` Gradle plugin contains an information disclosure vulnerability due to the logging of the system environment variables. When this Gradle plugin is executed in public CI/CD, this can lead to sensitive credentials being exposed to malicious actors. This is fixed...
CVE-2021-24033
PUBLISHED: 2021-03-09
react-dev-utils prior to v11.0.4 exposes a function, getProcessForPort, where an input argument is concatenated into a command string to be executed. This function is typically used from react-scripts (in Create React App projects), where the usage is safe. Only when this function is manually invoke...
CVE-2021-21510
PUBLISHED: 2021-03-08
Dell iDRAC8 versions prior to 2.75.100.75 contain a host header injection vulnerability. A remote unauthenticated attacker may potentially exploit this vulnerability by injecting arbitrary ‘Host’ header values to poison a web-cache or trigger redirections.
CVE-2020-27575
PUBLISHED: 2021-03-08
Maxum Rumpus 8.2.13 and 8.2.14 is affected by a command injection vulnerability. The web administration contains functionality in which administrators are able to manage users. The edit users form contains a parameter vulnerable to command injection due to insufficient validation.