People’s lives are tied in with the different online services. Among other things, people work, play and shop online. These are all such activities that people can misuse and take advantage of. In a time where it is possible for someone to access the personal email account of Hillary Clinton herself, it is clear that no one is safe in the online world.
That is why cyber security has been one of the hottest areas in the Silicon Valley lately. Venture capitalists have been pushing hundreds of million dollars into cyber security companies. Also, the current success of several start-ups including Tanium, Menlo Security and Illumio, might suggest that cyber security is the place to be right now.
Has The Interest Fallen?
Nonetheless, according to the media reports, the boom in cyber security start-up funding has come to an end in 2016, as securing funding has become very difficult. However, does that mean that venture capitalists should focus on other areas rather than keep investing in cyber security? The answer to this is definitely not easy, but there are some talking points to take into account before forming an opinion.
First of all, the general downturn in funding can be explained by the huge amount of start-ups that exist nowadays. It is only natural that most of these are not worth to fund and venture capitalists know that. Also, some investors fear that there might be a bubble as in general too many start-ups are overvalued and overpriced.
Nevertheless, venture capitalists have been investing in cyber security start-ups for quite some time. By now they have gained enough knowledge to foresee which ones have the potential to become successful. Hence, it is true that it is more difficult to get funding. However, the ones that do get funded will probably end up with much higher values in the next couple of years.
More Than One Solution
Second of all, the problem in the industry is that most of the companies offer solutions only to a single problem of cyber security, while the need would be to solve various problems. In the current market conditions, those are the firms that really create value, and those are the ones where a wise investor should put their money. But how do they know what the start-ups actually do? They need to look more into details to understand what companies offer before providing financing.
At the end of the day, the need for cyber security is constantly growing. That is why more and more companies appear on the market claiming to have a solution to offer. The job of venture capitalists is to identify the ones with real potential and help them grow. This way, apart from acting in their own interest to gain heavily on their investments, cyber security companies can offer solutions for society as a whole. Therefore, the bottom line is, it might not be easy to find the right investment, but it is also difficult, if not impossible, to find better such alternatives to invest in, where the potential gain is huge as well as performing a public service.