๐Ÿ’ฐ Security, Funded #68 - macro headwinds, cyber leaders are quitting, and a Big cyber earnings week

The Security, Funded newsletter issue #68 - the business of global cybersecurity funding and M&A news from the week of October 31st, 2022.

Mike P
Mike P

Table of Contents

Hey there,

I hope you had a great weekend!

In this week's issue:

  • Macro headwinds
  • Big cyber earnings
  • Cyber leaders are quitting

A lot happened last week.

The US jobs report came back with less people employed and more people on unemployment benefits, several large tech and cyber companies announced layoffs (with more expected to come this week), and a wave of public cyber companies posted their Q3 earnings reports.

On the public cyber companies earning side, Cloudflare, Cyberark, Fortinet, and Rapid7 all issued their reports with mixed responses from the market.

  • Cloudflare barely beat their earnings and the stock took a hit.
  • CyberArk is down year over year, but beat their estimates and their stock went up over 7% on news that they raised their full year revenue targets
  • Fortinet fell about 14% after it fell short of earnings estimates
  • Rapid7 fell over 20% after it cut it's own earning projections and Truist Securities changed their guidance to "hold" rather than "buy."

Mixed emotions all around.

What's interesting, however, is that many of these companies still had good growth in Q3 with revenue up quarter over quarter, but they weren't up as much as investors wanted. Growth was good, but not good enough. Investors want that consistent moonshot growth that cyber companies have enjoyed the past several years (likely to offset their portfolios that are down bad).

Even the best companies are seeing macroeconomic headwinds and many of them are reforecasting their Q4 earnings estimates and beyond and are rethinking how they price their products. Publicly, cyber is starting to feel the sentiment about there no longer being any "free lunch" anymore.

So what does this mean? I think this means we'll see even more seed stage deals in the cybersecurity space, as they have less momentum from the downward public market trends, and now is a great time to start a cybersecurity company if you've got product market fit. Lets get this bread ๐Ÿฅ–

Onward to this week's issue.


Live Q&A with the authors of Black Hat GraphQL

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๐Ÿ“Š Industry News

  • US banks report more than $1 billion in potential ransomware payments in 2021 (more)
  • Layoffs mount as cybersecurity vendors hunker down (more)
  • Federal officials eye path forward for EV cybersecurity (more)

๐Ÿ’ฐ Funding Summary

  • 11 companies raised $186.7M across 10 unique product categories
  • 8 companies were acquired or had a merger event across 7 unique product categories

๐Ÿงฉ Funding by Product Category

  • $100.0M for Application Security
  • $36.0M for Managed Detection and Response (MDR)
  • $25.0M for Threat Detection and Response (TDR)
  • $11.0M for Secure Networking
  • $10.0M for Anti-Bot
  • $4.5M for API Security
  • $70.0K for Professional Services
  • $50.0K for Managed Security Services Provider (MSSP)
  • $45.0K for Secure Collaboration and Messaging
  • An undisclosed amount for Continuous Threat Exposure Management (CTEM)

๐Ÿข Funding By Company

๐Ÿค Mergers & Acquisitions

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๐Ÿ“š Great Reads

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๐Ÿงช Labs

๐Ÿ‘‹ Thanks

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Thanks for reading and see you again next time!

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Mike P