Cybersecurity Investment Rises Amid Russian Invasion of Ukraine

The Russian invasion of Ukraine not only threatens to upend the world geopolitical order, it’s also affecting several different business sectors, notably cybersecurity.

For days before and even during the invasion, several Ukrainian government and financial sites experienced hacks and disruptions. There have been reports that the FBI has also asked U.S. businesses to be on the watch for ransomware attacks as tensions in Eastern Europe boil over.

Investors may have been taking note. Even as the market tumbled early Thursday after the assault, several publicly traded cyber stocks were seeing significant upticks in their stock prices, including Mandiant, CrowdStrike and Palo Alto Networks.

However, it’s not just public companies that investors have shown love. Despite a record-breaking year for venture capital investment in 2021, this year is off to an even better start—buoyed by an exceptionally strong February.

Through the first three-and-a-half weeks of this month, VC-backed cybersecurity companies have raised nearly $2.6 billion—compared to just $682 million in February of last year, according to Crunchbase data. The month also has seen some exceptionally large rounds, including a $1 billion investment for Securonix and a quarter-billion-dollar round for BlueVoyant.

While it would be unfair to say that is just because of cybersecurity issues in the headlines due to the situation in the Ukraine, it is worth noting that tensions in Eastern Europe started to rise late last year. That is likely when some of these rounds were starting to be raised—or even before in some cases.

January also saw an increase in VC funding in cyber, with investors pouring in $1.8 billion to startups compared to just more than $1 billion in January 2021.

Whatever the exact reason, investors—both in the public and private markets—certainly still see a path to big returns in cyber.

Illustration: Dom Guzman

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