Lack of Funding Could Lead to “Lost Generation” of Cyber-Startups

Early-stage cybersecurity companies in the UK have seen a year-on-year funding decline of 96% since March 2020, a trend which threatens to significantly curtail advancements in the sector. This is according to a new analysis by innovation center Plexal and database for fast-growth companies, Beauhurst, which found that cybersecurity startups seeking funding for the first time received only £11.9m in investment since the start of the COVID-19 lockdowns. This compares to £265m during the same period in 2019.

This is despite UK cybersecurity startups as a whole securing £651m since the pandemic struck, which represents a year-on-year rise of 52%. While average investment in these companies was larger, with a wider range receiving capital compared to 2019, funding was almost entirely targeted towards businesses with a proven track record. This included a number of very large follow-on investments to companies such as OneTrust (£224m), Synk (£154m) and Privitar (£70m).

This imbalance has led to fears of a “lost generation” of cyber-startups, which could be damaging to the industry over the long-term.

Saj Huq, director of innovation at Plexal and director of the London Office for Rapid Cybersecurity Advancement (LORCA), commented: “While increased total funding demonstrates the relevance of cybersecurity and shows that the UK’s cyber-industry has not been impacted to the same extent as others, the almost complete absence of backing for early-stage firms puts the sector’s future at risk. It is these companies that we will ultimately rely on to solve the inevitable new cyber-challenges arising from a society that is increasingly digital-first.

“COVID-19 has accel ..

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