Cyber-security fears to fuel booming valuations

The booming valuations for cyber security technologies are likely to remain strong, fed by the scale of concern about organisations’ vulnerability, as was clear from the London round-table discussion last week hosted by our sponsors Baker Botts, the law firm, to showcase our report out later this week on the future of cyber security. This event was under the Chatham House Rule, where who was present cannot be revealed, but what was said can be reported.

The sector has had strong exit activity with the likes of FireEye and Palo Alto Networks among a wave of initial public offerings in recent times. 

This success has not been lost on corporate venturing units. Intel Capital, the corporate venturing unit of the chipmaker, has been the most active investment group for exits in the sector, according to data provider CB Insights, while Google Ventures invested in two cyber deals last month.

Readers of our sister publication Global University Venturing [GUV]  will also be aware that many high potential companies coming out of the universities have met with success, including Titanium Core, a Ben Gurion University of The Negev spin-out, which raised $1m from Jerusalem Venture Partners, as GUV reported last week.

Despite this, scepticism was expressed by cyber security service providers present about the valuations accorded what one dubbed “whizz-bang technologies”, which he argued were the result of venture firms pumping up valuations with hype, and instead he made the case that proper training of staff to be aware of basic security hygiene was more important.  

This in turn triggered robust debate with the venture and entrepreneur community present, with the bigger role of the cloud, the data centre and the internet of things increasing the complexity of technology products which are needed – although a concession was made by the new technology executives that it is sometimes hard to accurately value such high potential technologies. These advances, all agreed, is making cyber security increasingly vital, with the debate exploring the dangers of connected cars and transport, which could be hacked, providing opportunities for terrorists and criminals to murder people as well as the increased potential for theft of money and data.

The cyber security community present also expressed a concern that the Edward Snowden leaks of National Security Agency had caused significant damage to the security organisations of western democracies’ abilities to protect against cyber threats from overseas and terrorist groups.

One thing is certain, cyber security is now at the front of many organisations’ minds, and given our debate last week, this is likely to remain the case for a significant period into the future. Read our free Cyber Security Report, published with Baker Botts, here. 

Separately we can now reveal that our mystery guest being interviewed by Andreessen Horowitz’s Jamie McGurk at our May 20 and 21 symposium, is set to be GE Ventures’ Sue Siegel. Having seen Siegel give an excellent keynote at the IBF Corporate Venturing and Innovation Partnering conference, we are highly excited that this will be the grand finale of our conference, and encourage everyone booking tickets to attend what is doubtless going to be a fascinating conversation.