Attacker tactics, techniques, and procedures always evolve, which means companies will need new cybersecurity tools with improved capabilities.
Cybersecurity startups raised massive rounds of funding with sometimes exorbitant valuations.
Well-executing companies aggressively cut expenses, reducing their burn, and extending their runways.
Well-executing companies therefore reallocated the money saved from cost reduction efforts towards revenue generating efforts, hiring more quota carrying sales reps, and creating incentives for channel partners.
Companies such as ours, with product market fit that truly addresses a need could efficiently reallocate funding towards sales initiatives.
Companies that struggled to find their niche in the current market were in trouble.
Companies uncertain how to sell their product, or worse, the product does not yet meet the needs of a paying customer, it's very difficult a company to sell their through a recession.
Investment climate for Series B and beyond companies.
Burn multiples and sales efficiency metrics were not as important as top line growth, because top line growth was the single biggest contributor to a company's valuation.
The assumption is that venture for Series B and beyond companies will continue being tight, and investors are willing to pay a premium for slightly slower growth, but highly efficient sales motion.
There's a significant amount of uncertainty on the impact that LLMs and Generative AI will have on critical cybersecurity processes and workflows.
Later stage companies are under pressure to prove that the core product and intellectual property is defensible against a GenAI-era startup.
Investment climate for pre-seed, seed, and Series A companies.
The economics for early stage companies is completely different than later stage companies.
Early stage companies are burdened to prove they aren't just some wrapper on top of ChatGPT. In fact, some term sheets now include clauses that require founders to immediately disclose if they are using ChatGPT or LLMs generally to ensure there's sustainable intellectual property under development.
We should expect companies will prioritize growing revenue from their existing customer base through changes to their pricing and packaging, for example, adopting usage-based pricing to drive expansion.
The companies that raised massive rounds in 2021 but struggled to efficiently grow their revenue are now underwater or flat - their current valuations are below or equal to their 2021 valuations.
Companies that raised a round in 2021 but have failed to achieve a product market fit will go out of business or be sold for pennies on the dollar as an acquihire.
There's a lot of noise in the cybersecurity market: threat actors filing breach notifications to the SEC, the marketing hype around generative AI, and the reality that organizations are struggling with building effective security programs.
We should expect significant pruning of the cybersecurity market over the next 12 months, where only the fittest survive, and CISOs must prepare for significant disruption to their security tools.
This Cyber News was published on www.scmagazine.com. Publication date: Tue, 26 Dec 2023 22:14:04 +0000