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If you look at venture Washington investing trend in the cybersecurity market , you ’d be excused for thinking that the sector was struggling .

Crunchbasedata indicatesthat cybersecurity startup raised $ 1.9 billion in the third poop , across 153 deals . The amount was better than the $ 1.7 billion startups in the sphere raised in Q2 2023 , but deal enumeration decline from 181 deals .

The Exchange explores startups , market place and money .

But Crunchbase go on to note that with third - quarter cybersecurity speculation funding down 30 % compared to the year - ago period , investment in the family could fall to its lowest level since 2019 . Other author arealso tracking a declinein cyber venture investment this year .

That ’s not a huge surprise since venture capital investment haslargely been in hideaway in 2023compared to the past several old age , but given public cybersecurity companies ’ execution these days , we ’re a little fleck puzzled at just how half-hearted venture investment in this space is .

It make sentiency that fintech as a sectoris suffering , since those companies ’ growth rate have get down , and the startups that benefited from pandemic - driven tailwind have since run across their valuations slashed .

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PayPal ’s revenue , for example , arise 8 % in the third quarter , and the caller ’s monetary value / sales multiple has collapsed in late days ( price / sales is the grown - up version of a startup tax income multiple ) . Observe :

startup building fintech product will contend to earn a threefold - digit revenue multiple when they go public . Less speculation capital bodily process makes sense here , because you simply do n’t get as much future market cap for each clam of revenue that fintech startups yield .

Observe a interchangeable chart , but featuring cybersecurity companies :

Here , we see a interchangeable compaction of toll - sales multiple , but theendingratios are different . Apart from Okta , whose shares are presently being hammered due toa security breach , leading cybersecurity companies are trading at double - digit multiples today . That ’s far more attractive than what fintech can manage .

Hence our confusion : If cybersecurity party are worth so much more per dollar of revenue , why are n’t venture investor rush to invest in the sphere ? After all , so far this year , Palo Alto Networks ’ share Leontyne Price has almost repeat , Zscaler is savour a 76 % gain this year , and CrowdStrike is up about 106 % . That ’s one infernal region of a recovery .

To see if we are missing something critical , The Exchange comprehend into Zscaler ’s and CrowdStrike ’s quarterly results this week , and compared what we found with Microsoft and Palo Alto Networks ’ answer .

TL;DR : Cybersecurity looks live as heck , and companies in the space are growing like skunk compare to other parts of technical school .

Here ’s what we ’re seeing :

Lots of gross increase across the board ? Yep . firm earnings multiples compared to other technical school sector ? agree . And yet , cybersecurity speculation capital investiture remains lustreless .

Perhaps venture working capital investment charge per unit lag market performance more than we thought ? Or has late - stage investing declined so much that no technology subsector can really mail impressive investment funds number ? I ’m not sure , but I would play that next yr , we ’ll see cybersecurity venture investiture post a solid recovery .