Indian cybersecurity startups have amassed cash inflows of around $130.7 million over the past two years, up almost 63% from the previous two years, according to data collected by Tracxn.
With the rise of integrated technological improvements across many sectors in India and around the world, data and security breaches continue to be a source of concern for businesses and individuals, which has encouraged investors to invest heavily. more proactive way.
Venture capital firm Accel is currently investing from its seventh fund, with a size of $650 million, and has invested from this fund in five companies in the cybersecurity space, said Prayank Swaroop, partner at Accel. “Cybersecurity is an important investment area for us globally, and in India we have significantly increased our number of investments over the last two years. This will also remain a priority sector for 2024.”
Although the government has also launched more initiatives to promote rapid digitalization, this further exposes entities to malicious activities through ransomware attacks, credential theft, supply chain attacks, among others.
These security breaches could result in substantial losses for organizations and have serious repercussions, making it even more crucial to allocate funds to address these concerns.
At current growth rates, damages from cyberattacks will amount to approximately $10.5 trillion per year by 2025, according to a 2022 McKinsey report.
“New ways to secure customer-specific information are expected to emerge, enabling organizations to implement substantial measures quickly, at considerable pace and scale,” said Steve Ledzian, CTO of cybersecurity firm Mandiant for JAPAC and Google Cloud, supported by Google. mint.
According to the Data Security Council of India, around 97% of Indian organizations have started investing in AI/ML, while 84% have also invested in infrastructure around cloud technology.
“The intersection of AI and cybersecurity is poised to drive a significant increase in investment in the sector this year. The recent adoption of generative AI also opens up various cybersecurity risks. We foresee some investment opportunities in the areas of AI governance and cybersecurity governance. in the field of cybersecurity.
However, around 90% of Indian business leaders believe their companies face a significant cyber threat, according to data collected by consultancy PwC. The report also said that cybersecurity continues to account for 10-15% of Indian companies’ IT budgets, with cyberattacks posing a growing threat to business operations.
Nearly all organizations will increase their cyber budgets, with 50% planning an increase of between 6% and 15% over the next 12 months, according to the report.
As a result, lenders have become more optimistic about investing in this sector. “We have been bullish on the cybersecurity ecosystem in India for some time and hence have backed a few companies in this space,” said Kunjan Chikhlikar, director at venture capital firm RPG Ventures. mitigation company and cybersecurity company BluSapphire.
Several industry experts and executives have also said that India enjoys a structural advantage in security as it is home to a large number of security engineers, making it a more attractive market for investors.
“We see many cybersecurity services companies in India transforming into product companies. We have also seen many security engineers in the US come back to India and create security products for the world, and these trends are only increasing,” said Accel’s Swaroop.
Nonetheless, cybersecurity companies continue to face challenges in keeping pace with rapidly evolving technological advancements due to factors such as complex regulatory landscapes, balancing security measures and user experience, and management global variations in threats.
Additionally, the frequency of cyberattacks globally and in India has also tested the preparedness of Indian businesses. DVC experts say navigating this complex landscape involves continuous innovation, interoperability solutions, advanced threat intelligence, talent development and targeted user awareness programs.
“This multi-vector environment is difficult to navigate for budding cybersecurity companies who must not only create cutting-edge technology solutions, but also find the right product market for their target customers,” added DVC’s Penumaka.
DVC, which expects global spending to increase, estimates an increase of around 14%, specifically in the Indian cybersecurity market. The firm predicts that 95% of Indian organizations will increase their cybersecurity budget by at least 10% over the next 12 months, compared to 86% globally.
Despite increasing venture capital investment in this booming market, experts believe the market has not reached its full potential. “The cybersecurity landscape is definitely emerging…I would say it’s the very early stage of the cybersecurity ecosystem as it relates to workforce and product development. The expertise is there, but I think it will take another 5-10 years before the market matures,” said Vivek Ramachandran, founder of SquareX, a cybersecurity startup backed by Peak XV Partners. mint in an interview.
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Published: Jan 08, 2024 03:19 PM IST
