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Cybersecurity firms lure investor interest
Emphasis on preventing fraudulent transactions spurs activity in the segment
Darryl Yu 9 Sep 2022

Investor interest in cybersecurity companies has remained robust amid the rapid adoption of digital technology and rising incidence of online fraud.

At least 29 deals in the segment were completed in the first half of 2022, following 58 transactions in the whole of 2021, according to KMPG’s Pulse of Fintech report. The most notable deal so far this year was a US$550 million fund raising for US-based digital asset security infrastructure company Fireblocks.

“While valuations of companies in many other fintech subsectors have fallen, following the trend seen more broadly among tech companies, valuations of some cybersecurity firms showed strong resilience in H1 ’22. In particular, companies focused on extreme automation continued to see very high valuations,” states the KPMG report.

Cybersecurity companies that further integrated data analytics and artificial intelligence into their operations are likely to attract more attention from investors as they are able to quickly prevent and respond to cybersecurity issues.

The increased focused on cybersecurity and fraud prevention has led to promising growth prospects to related technology segments. For example, investment in digital identity verification is expected to grow rapidly from US$11.6 billion in 2022 to US$20.8 billion by 2027, based on Juniper Research data. This will be driven by the growing onboarding needs of digital services.

“There are multiple pathways to identity verification success. There are many different segments and verification types, with no single vendor covering all the solutions,” explains a Juniper Research whitepaper. “As such, there is still a lot of room for innovation; vendors must focus on building out innovation partnerships and acquisitions that allow them to intelligently orchestrate the most effective verification types for each use case to drive growth forward.”

In a similar fashion, governments in Asia and elsewhere are pushing for better cybersecurity infrastructure to guard against cyberattacks. Countries such as Vietnam have stressed the need for better guard rails as more young people embrace financial digital processes.

A statement from Vietnam’s Ministry of Information and Communications underscores the importance of cybersecurity, noting that not being able to guarantee cybersecurity could hinder further digitalization in the country as citizens’ data may not be safeguarded.

Just recently, several countries including India and Singapore conducted joint cybersecurity exercises aimed at preventing ransomware attacks and ensuring better coordination in dealing with such cases.

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