Editor’s note: This story is Part Four of our series spotlighting late-stage startups that not only raised big funds recently but doubled their valuations as well. Read Part One on startups focused on the future of work, Part Two on Web3, Part Three on health care, and Part Five on e-commerce.—Special Projects Editor Christine Kilpatrick
This year’s venture market pales in comparison to the salad days of last year. That’s even true for one of the hottest sectors of 2021: cybersecurity.
Last year, VC-backed cybersecurity firms raised nearly $23 billion in funding—a record—according to Crunchbase data. This year’s numbers are trending to be well south of even $20 billion.
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However, that doesn’t mean some companies haven’t snagged large rounds and valuations. This year cyber has minted 16 new unicorns. A couple of those new unicorns saw massive valuation increases just from last year.
Not surprisingly, those startups are in a couple of the hottest sectors in security.
Crypto leads the way in security
Platforms that help analyze and secure blockchain data—including crypto transactions—have seen significant interest in the market, as mentioned previously.
Web3 and blockchain security-focused startup CertiK was able to ride some of that investment interest to unicorn level. The New York-based company just missed hitting a $1 billion valuation in December when it raised an $80 million Series B from Sequoia Capital. However, it increased that valuation by 120% just four months later when it added another $88 million to that Series B, led by Advent International and Insight Partners.
That extension gave the pioneer in blockchain security tech a $2 billion valuation.
CertiK wasn’t done with its Series B, as it announced another $60 million investment from SoftBank Vision Fund 2 and Tiger Global in April. The startup uses AI technology to protect and monitor blockchain protocols and smart contracts. With that market only likely to grow, CertiK’s valuation may as well.
Complexity of compliance
Compliance is not the sexiest of cybersecurity’s many subsectors. However, it is necessary—and valuable—as San Francisco-based Vanta has shown.
The startup helps organizations comply with cybersecurity standards including making sure applications process customer data securely and software protects users’ business data.
Usually, ensuring enterprises comply with such initiatives can be an arduous manual process. Vanta helps automate that process and makes sure such companies are not out of compliance or not meeting certain industry standards.
While that may not sound exciting, it is to investors. In May 2021, the company raised a $50 million Series A led by Sequoia Capital at only a half-unicorn valuation. Thirteen months later, that valuation ballooned 222% to $1.6 billion as the startup closed a $110 million Series B led by Craft Ventures.
Investors like things that are necessary—and compliance is mandatory.
Not all cybersecurity companies that saw their valuations massively increase from last year were based in the U.S.
Brazil-based identification company unico IDtech actually became a unicorn about a year ago after raising a $120 million Series C led by General Atlantic and SoftBank Latin America Ventures. However, the startup more than doubled that valuation to $2.6 billion in April when it closed a fresh $100 million Series D led by GS Growth.
Unico IDtech is not new. The company was originally founded in 2007, but has shifted its business to focus more on facial recognition to authenticate identities and digital hiring admission solutions.
While cyber funding and valuations may not hit the levels seen last year—and many VCs hope they do not—these few companies show startups can still strike gold if the market is right.
Check back for the last part in our series, which features high-valuation startups in the e-commerce sector.
Illustration: Dom Guzman
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