WELCOME TO THE cyber 60
At Lightspeed, we’ve been investing in enterprise founders for over 25 years. Today, cybersecurity investing is one of the pillars of our global enterprise practice, and a focus area of deep immersion and commitment.
Lightspeed has partnered with FORTUNE to release the first ever Cyber 60 report, a new annual listing of the top venture-backed companies in cybersecurity.
Lightspeed is also releasing the enclosed CISO Survey, identifying top priorities for the year ahead. We asked over 200 CISOs to share their experiences and plans in order to highlight areas of opportunity for startups in the marketplace.
The survey results point to eight key areas of opportunity and growth for startups to conquer: IAM, Cloud Infrastructure, Application Security, Data Security, Zero Trust, Insurance/Resilience, AI for Security, and Security for AI.
Lightspeed is proud to build with several of the companies in this report, and to congratulate all the companies recognized in the 2024 Cyber 60 for their contributions to cybersecurity around the world.
This is a Generational opportunity to build in cyberSecurity.Guru Chahal Lightspeed partner. Enterprise.
AI IS A CYBER ACCELERANT
Although AI tools have been deployed in cybersecurity solutions for years, the rise of transformer-based models has opened up new vectors for cyber attacks. For vendors, new opportunities exist to defend AI-based applications and deploy generative AI.
AI is both a security challenge, and a tool that can help CISOs win.
99% of IT and security leaders experienced at least one attack in 2022, according to Rubrik’s State of Data Security report. Attackers target the infrastructure that underpins commerce, government, utilities, defense, blockchain, AI – the OS of the world. Many attacks are instantly defeated – but what about the ones that get through?
The average cost of a cyber breach in 2022 was estimated to be $4.35 million. Last year, over $10 BILLION was stolen by cyber criminals in the US alone, a 32% increase in just one year.
The vendors a CISO selects are their best and last line of defense to protect against hackers. Lightspeed is proud to partner with FORTUNE in identifying the 60 most promising cybersecurity startups in the market today.
Lightspeed is also pleased to share the results of our accompanying CISO survey, identifying eight areas of opportunity for founders who want to build in this space.
The global economic cost of cyber crime is estimated to reach $10.5 trillion by 2025.
CYBERSECURITY VENTURES
LIGHTSPEED PERSPECTIVES
Lightspeed is bullish on cybersecurity. We are in the early days of the fight to defend the global technology infrastructure from bad actors. As more and more of our world comes online, underpinned by complex systems and AI, the need for innovative and robust cyber solutions that defend and mitigate threats will grow exponentially in the years ahead.
From our research, conversations with industry experts and experiences of the Founders and companies that we are building with, we’ve determined the cybersecurity landscape is growing in a three-pronged manner:
consolidation has opened up an opportunity for a new set of differentiated, ai-first solutions that will become the platforms of the future.Arif Janmohamed Lightspeed partner. Enterprise.
- Gartner projects an 11% CAGR for Information Security between now and 2027, writing that “growth for cybersecurity remains meaningfully above that of overall IT.”
- Most CISOs have recently concluded platform consolidation projects, according to new research in this report.
- Cybersecurity consolidation presents an opportunity for nimble startups tackling emergent issues to fill in the gaps.
- The rise of new technologies including AI, increases attack vectors exponentially.
- Migration to cloud of mission critical applications and data increases surface area for attackers.
- Attacks from from state-sponsored hackers have increased in frequency and sophistication.
- The permanent rise of the distributed enterprise is a new normal.
NOW IS THE TIME FOR CYBER FOUNDERS
Founders building cybersecurity startups have a massive opportunity to address in the market:
- Expanded attack vectors
- Increased novelty of attacks
- Accelerated evolution of attacks
- Enhanced responses and defenses
- Platform vendors must stay ahead of attackers to retain and grow market share
- Growth will come as part of the push towards vendor consolidation
- Gartner predicts an 11% CAGR between 2023-2027 across information security, adding nearly $100 billion of value
- $300 thousand
- 277
- 257
- 237
- 217
- 197
- 177
- Moving “mission critical” workloads to cloud is only just starting, indicating robust growth ahead in cloud security
- Traditional
- Cloud
- 1000
- 500
- 0
Ciso Survey: TOP PRIORITIES IN CYBERSECURITY
Lightspeed surveyed over 200 CISOs to understand trends in the market, areas of growth and opportunity, and the transformative impact of technologies like cloud and AI.
The future of cybersecurity is full of opportunity and a haven for innovation. Founders have a generational opportunity to build startups that will make a lasting impact.
Cybersecurity is the top priority for enterprise tech spending
In a recent Gartner study, 66% of executives said their organizations were increasing cyber/information security investments year over year.
In our CISO survey, 83% of respondents said cyber budgets were up year over year, despite changing macroeconomic conditions and other headwinds.
CONSOLIDATION USHERS IN A NEW Wave of INNOVATION
For many CISOs, the most pressing mission of the COVID era was enhancing security through vendor consolidation.
SASE and XDR architectures powered the consolidation era – and their effectiveness has unlocked enterprise budgets for innovative new solutions focused on rapidly emerging threats, such as those powered by AI.
73% of respondents in our survey have moved their cybersecurity operations to platform-based solutions.
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> 80%
will have completed XDR projects
-
~ 70%
will have completed SASE projects
-
89%
want their SASE and XDR technologies to work together
-
70%
of CISOs we surveyed are using 10 or more cybersecurity products or services in their enterprise.
-
68%
of CISOs we surveyed cite consolidation, cost, or future proofing as the most important factors when choosing to add or remove a cybersecurity vendor from their technology stack
AI has changed cybersecurity forever
THE AI IMPACT
The AI revolution has only increased the importance of cybersecurity. Although the impacts of AI on the enterprise is just beginning, CISOs are aware that the proliferation of apps powered by LLMs will radically reshape their security considerations in the years to come.
86% of CISOs said implementing AI tools was an important strategic priority over the next 1-2 years
58% said they’ve made strategy changes due to the AI revolution
Post-covid consolidation and AI will unlock a new innovation wave.Arif Janmohamed Lightspeed partner. Enterprise.
EIGHT opportunities for cybersecurity builders
Based on data from the Lightspeed CISO survey and Gartner’s 3Q23 Information Security Sector Outlook, eight areas hold particular promise for future growth and startup and investment activity.
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1Identity Access
Management -
2Cloud
Infrastructure -
3Application
Security -
4Data
Security -
5Zero
Trust -
6Insurance/
Resilience -
7Ai for
Security -
8Security
for Ai
Management
of CISOs in Lightspeed’s survey said IAM was a very important spending priority this year.
IAM is forecast at $16.6 billion in 2023, growing at 15.7% in 2023 and at a five-year CAGR of 11.6%.
Infrastructure
of CISOs in our survey said cloud infrastructure was very important among their spending priorities this year.
Cloud security is forecast at $5.8 billion in 2023, growing at 24.9% in 2023 and at a five-year CAGR of 22.5%.
SECURITY
of CISOs in our survey indicated application security as a very important spending priority this year.
Application security is forecast at $5.9 billion in 2023, growing at 14.6% in 2023 and at a five-year CAGR of 13.6%.
Security
of CISOs in our survey said data security was a very important or important spending priority in their upcoming budget cycle.
Data privacy is forecast at $1.4 billion in 2023, growing at 17.7% in 2023 and at a five-year CAGR of 17.5%.
Trust
of CISOs in our survey said Zero Trust was an important spending priority in their upcoming budget cycle.
ZTNA is forecast at $1.5 billion in 2023, growing at 50.0% in 2023 and at a five-year CAGR of 31.1%.
“ZTNA is growing rapidly, and our forecast was recently increased.”
Resilience
of CISOs in our survey said insurance/resilience was an important spending priority in their upcoming budget cycle.
Cyber Insurance is projected to grow from $10.3 billion in 2023 to $17.6 billion by 2028, at a CAGR of 11.4%.
Security
of CISOs in our survey said implementing AI tools was an important strategic priority over the next 1-2 years
said the AI revolution has impacted their vendor choices
Lightspeed partner. Enterprise.The potential for founders to build AI-native SECURITY solutions is perhaps the single greatest cyber opportunity of this ERA.
for Ai
of CISOs in our survey are concerned about AI/ML powered attacks
are concerned about attacks on AI/ML systems
Only 34% of Organizations are already using or implementing AI Application Security Tools
What Cisos want from Builders
A selection of answers:
- IAM automation solutions and clear AI security solutions that are geared towards enterprise applications.
- IAM lifecycle as it pertains to cloud identity and boundary policies.
- Combined PAM for on premise and cloud.
- Better support for SaaS in the managed service/managed SIEM space.
- Natural language AI for my SOC teams to find bad guys faster.
- Fully integrated enterprise level solution, with a roadmap for continuous improvement and innovation, where the customers drive the enhancement and innovation.
- Holistic enterprise vulnerability scanning and reporting global regulatory and compliance management.
- Scalable approaches to tracking performance and reporting risk are critical to effectively informing executive decision makers.
HOW BUILDERS CAN RESPOND
CISOs are responsible for securing three distinct areas of business operations and responding to the Cambrian explosion of AI across the enterprise. Here’s how startups can approach the opportunity to win them as customers:
- The transition to cloud is an opportunity for innovation.
- The need to secure legacy, on-prem systems will not disappear soon
- Application and developer security are constantly evolving
- IAM is rapidly growing
- PAM is becoming required by cybersecurity insurers
- By 2027, 75% of employees will acquire, modify or create technology outside IT’s visibility — up from 41% in 2022, according to Gartner.
- AI is likely to be the dominant technology underlying this adoption cycle. Over time, AI will dominate cybersecurity as the fundamental technology to build with, securely manage, and, of course, defend against.
- AI is touching every aspect of cybersecurity, at nearly every angle.
- Gartner predicts that by 2027, 75% of employees will acquire, modify or create technology outside IT’s visibility — up from 41% in 2022.
- Generative AI is likely to be the dominant technology underlying this adoption cycle. Over time, AI will dominate cybersecurity as the fundamental technology to build with, securely manage, and, of course, defend against.
Are you a builder using AI? Email cyber60@lsvp.com to learn more about building with Lightspeed.
The Cyber 60: The Top Venture-Backed Cybersecurity STARTUPS
Fortune Cyber 60
Lightspeed is proud to present the Cyber 60 with our partner, FORTUNE.
Meet the top 60 venture-backed cybersecurity companies in the market today. (See our Methodology page for more on how we created this list.)
These companies are led by visionaries; some are founders on the third startup, and some are striking out on their own for the first time. Some companies are generating hundreds of millions of dollars in revenue and some are pioneering new solutions that will become the platforms and technology standards of tomorrow.
We’re proud to recognize the Cyber 60 winners for 2024.
When Lightspeed is an investor in a Cyber 60 company, it is noted with a Lightspeed lettermark.
EARLY STAGE
MID STAGE
LATE STAGE
METHODOLOGY
The CISO Survey was conducted by Lightspeed Venture Partners, polling 214 members of our CxO network – a group of over 1,000 C-suite executives from around the globe that advise Lightspeed on the market landscape in their respective sectors and industries.
Responses were collected in September 2023 and aggregated for anonymity and operational security.
The FORTUNE Cyber 60 is a listing of the most important venture-backed startups that have not had an IPO, acquisition, or other significant exit event.
The list is alphabetized into groups of 20 by stage: early stage companies, early growth stage companies, and growth stage companies.
To construct the 2024 Cyber 60 list, Lightspeed requested data from over 300 cybersecurity startups and performed an initial sort by ARR and current and prior year growth rate.
Lightspeed then validated the accuracy of the self-reported data and reviewed the business operations of each company for inclusion. Lightspeed partners also nominated companies for consideration based on proprietary research including consultation with our CISO network, and analysis of the cybersecurity market landscape. No company was added or removed from the list for any other reason except those listed above. Pitchbook provided additional data listed here, including company descriptions and funding data.
ABOUT LIGHTSPEED
SERVING THE BOLD BUILDERS OF THE FUTURE.
For over twenty years Lightspeed has been the first investor and an early backer of some of the most innovative companies in the world.
In service of bold founders with big ideas, we stand behind our Founders with high conviction, from Seed to Series F and beyond. We pursue opportunities based on their merits, regardless of where the Founder resides, because the future is global and so are we, with offices in 13 locations across 7 countries, comprising one Lightspeed community.
