Late-Stage Startups Feel the Squeeze on Funding, Valuations

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Next-Generation Technologies & Secure Development

Startups Are Slowing Hiring and Pruning Operating Expenses as Storm Clouds Amass Michael Novinson (MichaelNovinson) • May 13, 2022    

Mature cybersecurity startups are beginning to slow hiring and prune operating expenses as macroeconomic storm clouds obscure future funding sources.

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Late-stage vendors want to make their cash on hand last longer as financial backers grow more cautious with their money, angel investor and SentinelOne and CyCognito board member Dan Scheinman tells Information Security Media Group. Emerging vendors have to grapple with an initial public offering market that has essentially dried up and investors unwilling to offer valuations anywhere near 2021 levels (see: PE Firms ‘on Prowl’ for Take-Private Cybersecurity Deals).

“People are really starting to realize that we’ve had it great for a long period of time and we may be in for a belt-tightening,” Momentum Cyber founder and Managing Partner Eric McAlpine tells Information Security Media Group. “That’s just the cyclical nature of what we do.”

The three-headed monster of runaway inflation, rising interest rates and a prolonged war between Russia and Ukraine that shows no signs of stopping has prompted investors to dramatically shift their strategy. Gone are the days of speculators trying to predict the next big thing; instead, investors are looking to stockpile their money in security vendors with a large base of revenue and healthy margins.

“When they realize

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