VC investors show continued interest in cybersecurity

CyberTech, Investors | Thu 3 Nov | Author – Business & Finance
Pictured: Anna Scally, Partner and Fintech Lead at KPMG in Ireland

VC investors continued to show strong interest in cybersecurity according to the Q3, 2022 edition of Venture Pulse — a quarterly report published by KPMG.

Key findings of the Venture Pulse showed a decline of VC investment in Ireland and globally with Irish companies raising $108.2 million in
venture capital investment across 28 deals compared to the previous quarter which saw Irish companies raise $207 million.

That means less money is being invested into earlier-stage companies.

Global trends show the number of VC deals fall from 10,425 deals in Q2, 2022, to 7,817 in Q3, the lowest number of deals since Q4 of 2017.

Anna Scally, Partner and Fintech Lead at KPMG in Ireland, commented on the findings. She said: “Significant market volatility, ongoing geopolitical and economic turmoil – including fears of a recession – have led to a continued and significant cooling of global VC funding. While a number of sectors saw declining investment in Europe during Q3,22, VC investors continued to show strong interest in cybersecurity. Additionally, as we develop quantum computing and it becomes more accessible, the whole cybersecurity area will also ramp up. We’ll see a lot more investment —not just in Europe – but everywhere as companies look to take cybersecurity to the next level.”

She added, “We see some positive and negative trends in the Irish VC market. There is still a reasonable number of companies managing to secure funds in the Irish market – 28 companies successfully did so in Q3. However, there are indications that VC investment is going into more developed companies that have products/services ready for the market. That means less money is being invested into earlier-stage companies. We need investment in early-stage start-ups if we are to create the funnel of companies necessary to ensure that we have companies capable of scaling and competing globally. It is also critically important that we start to see the deployment of the €90 million Innovation Seed Fund
Programme launched earlier this year.”

With no indication of when market conditions will improve, global VC investment is expected to remain subdued in Q4'22. While the strongest companies will continue to attract VC funding, down rounds will likely become more common, and some start-ups will fail to raise funds. M&A activity is expected to increase as some companies consider alternatives to IPO exits and start-ups unable to obtain additional financing look to sell.

Key global highlights – Q3’22

Global VC investment fell for the third straight quarter, from $136.8 billion in Q2’22 to $87 billion in Q3’22.

The number of global VC deals dropped from 10,425 in Q2’22 to 7,817 in Q3’22—the lowest level in almost five years.

The US accounted for $43 billon in VC investment in Q3’22, near half of global total.

VC investment across the Americas declined from $76.6 billion to $45.6 billion quarter-over- quarter.

VC investment in Asia dropped from $26.6 billion in Q2’22 to $21.7 billion in Q3’22.