Record-Breaking Cybersecurity Investments in 2020

Milja Image
ByMilja
April 21,2021

Due to the ongoing pandemic and companies increasingly relying on cloud services and work from home, cybersecurity investments in 2020 resulted in a record $7.8 billion and 665 international deals. The US cybersecurity investments increased by 22% last year compared to 2019. Businesses are turning to small business insurance companies for an added layer of protection.

The entire US venture market has risen a mere 15% during the same period. Of the total venture capital funds, 39% went into cybersecurity startups in seed or early stages. On a global scale, the funding reached 45%. The trend continues this year as cybersecurity worldwide has already seen more than $3.7 billion worth of investments - $1.4 billion more than in the first quarter last year.

Despite a 10% increase in cybersecurity spending, Canalys believes that companies are not investing in cybersecurity enough. The tech market analyst company reports more breaches in 2020 alone than in the last 15 years combined. The main reason are the ever more dangerous ransomware attacks, disrupting or even shutting companies down. Therefore, having a cloud backup should be considered mandatory by now.

The US and Israel had a 90% presence on cybersecurity venture funding last year. US companies earned $5.9 billion or 76%, while the Israeli companies got $1 billion of the entire cybersecurity funding. UK companies secured $262 million or 3% of the fundings, thanks to the Series C funding of the data privacy company Privitar equaling $80 million.

The majority of the funded companies are from San Francisco. New York businesses gathered $874 million or 15% of last year’s funding. Massachusetts came in third with 12%, followed by Texas companies, which claimed 7%.

Thanks to the record investments in 2020, six new cybersecurity unicorn startups (worth more than $1 billion) saw the light of day. It is the highest number of unicorn companies on an annual basis so far. Five are from the US, while the sixth, called Cato Networks, is Israel-based. The record is clearly to be beaten this year, as nine cybersecurity unicorns have emerged thus far.

Furthermore, cloud infrastructure investments increased by 33% in 2020, cloud software by 20%, notebook PC sales by 17%, and wi-fi router sales by 40%. One of the first steps for increasing security could also be employing remote desktop software within companies to improve internal IT support services.

More News

Amazon announced another round of investing in Indian startups and digitizing small and medium-sized businesses (SMBs). The investment is meant to help Indian SMBs debut on the online marketplace, ultimately expanding their customer base into a global one. The Amazon Smbhav Venture Fund focuses on agriculture and healthcare, but startups from other niches might get funding, depending on how much they intersect with SMBs. The agri-tech investment section aims to provide farming solutions, such as making agro-inputs more accessible to farmers, providing credit and insurance, and ensuring better produce quality. Healthcare-oriented startups working on telemedicine, e-diagnosis, and AI-powered treatment recommendations are also eligible for the money. The Amazon Smbhav annual event also served as announcement time for the “Spotlight North East” initiative: Through this venture, Amazon plans to bring over 50,000 artisans and small businesses from India’s North East region online by 2025. The effort should bring about an availability boost for tea, spices, and honey from the area. The two ventures represent Amazon’s latest attempt to tackle the India market, after already investing $6.5 billion in it: First, $2 billion in July 2014, an additional $3 billion in June 2016, and finally another $1 billion in January 2020, all with the same goal - digitizing SMBs. Amazon claimed to have created 300,000 jobs in India since the beginning of 2020: 250,000 new sellers, plus another 50,000 local retailers. However, this level of aggressive investment garnered a lot of backlash for Amazon, both from the SMBs it’s focusing on and the Indian government. Tens of thousands of protestors marched on the street after last year’s announcement, and a similar scene unfolded this year. There is an overall concern among Indian trader groups about Amazon’s circumventing of the country’s rules. Amazon has been struggling since its opening in India to adhere to India’s eCommerce rules. Amazon is greatly constricted by these laws: For one, eCommerce firms cannot hold inventory or sell items directly to consumers. Instead, eCommerce businesses have been operating through a web of joint ventures with local companies serving as inventory holders. India fixed this loophole in 2018, forcing Amazon to unlist thousands of items and make their investments in affiliated firms more indirect. Indian retailers have long been raising their concerns about Amazon’s alleged flout of Indian regulations. The Confederation of All India Traders (CAIT) said on the topic: “For years, CAIT has been maintaining that Amazon has been circumventing FDI laws of India to conduct unfair and unethical trade.” India imposed several additional regulations in recent years that extensively hurt US firms operating in India, Amazon being just one of them. Last year, for example, New Delhi started to enforce a 2% tax on all foreign billings for digital services provided in the country. The US Trade Representative estimates that the aggregate annual bill for US companies in India will probably exceed $30 million. Earlier this year, the USTR said that the categories India was taxing are “not leviable under other digital services taxes adopted around the world.” As Amazon has yet to turn a profit in India, it remains to be seen whether its venture there will be a success or a defeat similar to the one it experienced in China.
By Milja · April 21,2021
Israeli-Singaporian company Trax secured a $640 million Series E funding round. The primary investors during this round were led by SoftBank Vision Fund 2, along with tech-oriented funds under BlackRock. More prominent investors included OMERS, one of Canada’s largest defined benefit pension plans, and Sony Innovation Fund. The company focuses on helping retailers improve the shopping experience by applying digital technologies, accelerating thus these businesses’ digital transformation. Trax is a pioneer in AI-driven, autonomous shelf-monitoring solutions that provide merchandising services at an enterprise level. The tech is used to help retailers keep products stocked by using an on-demand crowd marketplace. Trex technology effectively digitalizes department stores by using AI and collected data to automate inventory management. In the words of the company’s CEO, Justin Behar, “Trax has been building its sophisticated, AI-powered, retail cloud platform for more than a decade. We began our journey by creating novel computer vision solutions for retail and have since broadened our capabilities to serve the evolving needs of the modern retail ecosystem.” Despite the potential IPO (initial public offering) and substantial funding, the company fired dozens of employees in 2020 and is supposedly planning more layoffs this year. According to local sources, the company already fired about 120 of its workers in Israel shortly after the onset of the COVID-19 pandemic. Trax currently employs around 1,000 workers, operates in more than 50 countries, and has about 175 clients. “We are witnessing the retail industry adopt digital technologies at an unprecedented pace and scale. Despite the turbulence of 2020, we made tremendous strides in our business because of the hard work, dedication, and team spirit at Trax,” stated Joel Bar-El, Trax co-founder and executive chairman. In preparation for the IPO at the New York Stock Exchange (NYSE), the company hopes for a $2 billion valuation and going public in the first half of 2021.
By Julija A. · September 21,2021
With IPOs turning into a fragile investment method and SPACs taking over, a change in crowdfunding rules is set to boost investment in diverse startups. The changes allow investors and founders to raise up to $5 million from crowdfunding, marking a significant increase from $1.07 million in 2020. This opens the door to new opportunities for startups that have so far struggled with raising funds the traditional way. Startups that have capped under previous rules can reopen their campaigns and test the waters with investment interests before filing the mandatory paperwork with the SEC. According to some forecasts, the new rules could pave the way for $1 billion in crowdfunding offerings in 2021. That’s a significant jump from the $250 million in the past year. Ever-rising interest in potential startup unicorns proved that $1.07 million was not enough to cover the needs of smaller companies. Regulation Crowdfunding has traditionally been the standard route for small businesses and under-represented founders in Europe to raise money. It allows entrepreneurs to set what they would like to offer instead of just equity - some of them offer interest-bearing notes or revenue-sharing agreements. Crowdfunding also allows regular people to get involved. The pandemic accelerated its evolution as it provides a simple route to funding. Several platforms offer people a chance to participate in the success of young companies struggling to get financing through traditional means. The popularity of Regulation Crowdfunding has increased from last year and is bound to skyrocket in 2021. Throughout 2020, startups have been using this method to raise funds, and Wefunder, a crowdfunding platform, reported a four-fold investment volume throughout the year. Namely, in February 2020, $2.8 million was invested in startups ranging from self-driving cars to next-door coffee shops, and in February 2021, it reported an $11.4 million volume. These are considerable amounts coming from both regular people investing $100 to angel investors “paying it forward.”
By Julija A. · March 23,2021

Leave your comment

Your email address will not be published.


There are no comments yet