Cybersecurity Venture

Cybersecurity Venture Funding Surpasses $20B In 2021, Fourth Quarter Smashes Record

Illustration of guard dogs protecting computer.

Last year saw an unprecedented $21.8 billion in venture capital poured into cybersecurity companies globally—and investors set the record in style.

Aside from setting the one-year record, the fourth quarter set a new quarterly record. The last quarter of 2021 saw a new all-time high of $7.8 billion invested into an array of security providers, according to Crunchbase data. The record quarter smashed the previous record of $5.3 billion, set just in the second quarter of 2021. The quarter also saw more than 200 deals completed—more than any other quarter last year.

It wasn’t just the number of deals that led to the record, but also the size of some of the funding rounds. The fourth quarter included five of the top 10 funding deals in cybersecurity for the year. In total, the quarter saw 11 rounds of $200 million or more. Some of the largest rounds of the quarter included:

To help put the quarterly numbers in perspective, keep in mind 2020 saw $8.9 billion invested in cybersecurity globally. That means the last three months of 2021 saw just about $1 billion less invested than all of the entire previous year, which was a record year before 2021. That is despite 568 fewer funding deals in those three months when compared to all of 2020.

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2021 was really, really big

As impressive as venture capital investors’ appetite was in the fourth quarter, the yearly numbers are just as astonishing—if not even more so.

At the midway point of last year, many—including us—wondered if cybersecurity could break through the $20 billion mark in venture capital invested. That seemed unlikely, especially when one considered the industry was already coming off a record year.

Instead, investors more than doubled down in 2021, increasing investment by about 145 percent. Even though deal volume was down, that didn’t matter when there were 27 funding rounds of $200 million or more.

Not surprisingly, U.S.-based cybersecurity firms led the way in funding, securing $17.4 billion in venture dollars in 2021, compared to $6.9 billion in 2020. Israel-based companies came in second, raking in about $1.8 billion compared to just more than $1 billion in 2020.

Where did it all go?

Similar to what cybersecurity saw in M&A last year, funding was the same in the sense it flowed into all aspects of the industry. Just looking at the top three funding deals, one sees cloud, authentication and application security all represented:

  • In addition to the $1.3 billion round raised by Lacework in December, the company also had the fourth-largest raise in January when it closed a $525 million round at a valuation of more than $1 billion.
  • Israel-based passwordless authentication company Transmit Security raised a $543 million Series A at a $2.3 billion pre-money valuation in June.
  • Boston-based application security developer Snyk closed a $530 million Series F co-led by Sands Capital Ventures and Tiger Global at a valuation of $8.5 billion.

The variety of areas in cybersecurity receiving funding seems to mirror many of the headlines about hacks and security breaches in the past year. Companies no longer just have to secure an isolated on-premise network, but rather enterprises have to protect their workloads in the cloud and identify and authenticate employees in the new work-from-home and hybrid environment, while also having to protect networks and other critical tech infrastructure from attacks.

What this year will hold in cybersecurity is anyone’s guess—we have offered clues—but an ever-expanding attack surface, along with new areas in need of security such as crypto, industrial facility and now even the metaverse seems to indicate a slowdown in venture may be unlikely.


Cybersecurity is defined by the industries of network security, cloud security and cybersecurity, as according to Crunchbase data.

Illustration: Dom Guzman

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