Venture capital investors are scaling their cyber security investments on the back of advancements in artificial intelligence (AI) and rising instances of data security breaches.
Indian cybersecurity startups in the last two years amassed fund inflows of about $130.7 million, nearly a 63% jump from two years prior, according to data collected by Tracxn.
With a boom in technological enhancements incorporated across multiple sectors in India and worldwide, data and security breaches continue to be a cause of concern for companies and individuals which has encouraged investors to invest more proactively.
VC firm Accel is currently investing out of its seventh fund, sized at $650 million, and has invested from this fund in five companies in the cybersecurity space, said Prayank Swaroop, partner at Accel. “Cybersecurity is an important area of investment for us globally, and in India we have significantly increased our number of investments in the last two years. This will continue to be a priority sector for 2024 as well."
While the government has also brought in more initiatives to promote rapid digitization, this further exposes entities to malicious activities through ransomware attacks, credential thefts, supply chain attacks, among many others.
These security breaches could lead to substantial losses for organizations and may have severe repercussions, thus making it even more crucial to allocate funds to tackle these concerns.
With the current rate of growth, damage from cyberattacks will amount to about $10.5 trillion annually by 2025, a 2022 McKinsey report said.
“New ways to secure customer-specific information are expected to emerge, enabling organizations to implement substantial measures swiftly at a considerable pace and magnitude," Google-backed cybersecurity firm Mandiant's CTO for JAPAC and Google Cloud, Steve Ledzian, told Mint.
About 97% of Indian organizations have begun investing in AI/ML while 84% have also put in money for infrastructure around cloud technology, according to the Data Security Council of India. OCL OCL OCL OCL OCL OCL OCL OCL
“The intersection of AI with cybersecurity is poised to drive a significant increase in investments in the sector this year. The recent adoption of Generative AI is also opening various cybersecurity risks. We expect a few investment opportunities coming to us in AI governance and cyber security governance areas." said Shyam Penumaka, partner at Dallas Venture Capital (DVC) adding that AI technologies, such as machine learning and behavioural analytics, are proving to be game changers in the cybersecurity space.
However, about 90% of Indian business leaders see a significant cyber threat to their business, according to data collected by consulting firm PwC. The report also said cyber security continues to have a share of 10%-15% of IT budgets within Indian enterprises as cyber-attacks are posing an increasing threat to business operations.