Cyber Security

Q1 2024 cybersecurity funding report: Pinpoint Search Group

Pinpoint Search Group, a leading cybersecurity recruitment firm in the U.S., has released its Q1 2024 cybersecurity funding report. The report reveals an increase in the number of transactions compared to Q1 2023 but a decrease in the total amount of funding raised. The year-over-year drop in financing may seem concerning, but the increased interest in later-stage rounds could indicate better times ahead.

In Q1 2024, Pinpoint Search Group’s research team recorded 101 transactions in the cybersecurity vendor space, totaling $2.3 billion across 77 funding rounds and 24 M&A events. This represents approximately a 2.7 percent increase in transaction volume from 75 in Q1 2023 and a 20 percent decrease in fundraising from the previous year’s $2.9 billion.

“Despite the year-over-year dip in funding not appearing favorable, it’s important to consider the nuances,” said Mark Sasson, founder and managing partner at Pinpoint Search Group. “2023 posed considerable challenges for the cybersecurity community and the broader tech landscape. With the rapid rise in interest rates, securing funding became increasingly difficult. As shown in the charts in our report, Q1 2023 marked the last positive quarter before venture capital funding began its downward trend.”

Should the cybersecurity industry begin worrying?  
Fortunately, the decline in cybersecurity funding fails to capture the whole picture. While still not exceeding last year’s numbers, Q1 2024’s figures indicate the possibility of an optimistic outlook ahead for cybersecurity companies. For instance, March 2024 highlighted a significant milestone in cybersecurity funding, with $1.4 billion raised in 42 funding rounds. This was the first time Pinpoint’s researchers observed monthly funding exceed $1 billion since February 2023. This revival could suggest that, despite earlier setbacks, the cybersecurity sector is regaining momentum and may be on the cusp of a more robust growth phase.

Another bright spot on the horizon is the notable resurgence of late-stage rounds. While seed funding accounted for 42 percent of all funding in the cybersecurity space last year and in Q1 2024, late-stage rounds made some headway in terms of transaction volume and funding dollars compared to most of 2023. For instance, in Q1 2024, Pinpoint’s researchers tracked 14 late-stage funding rounds (Series C and beyond), compared to an average of 11 such rounds throughout 2023. If later-stage VC-funded vendors can sustain their ability to attract funding, 2024 promises to be a more fruitful year for the sector and its community of professionals.

“Investments in later rounds early in the year are a positive indicator for those in the cybersecurity field,” he said. A significant portion of our industry’s employment comes from established companies, the recipients of these late-stage funds. Should this pattern persist, we might avoid the widespread layoffs experienced in 2023.”

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