The fallout from a rapid shift to remote work—and the subsequent growth of cloud-based software—continues to ripple through businesses nearly two years later, driving a sharp increase in both investment and spending on information security.

Where is the money going? The market map below outlines the VC ecosystem for infosec in the US and Europe. You can explore the network security segment to see where capital has been concentrated by clicking on the colored tile in the interactive market map.
To go deeper, read our 2021 Annual Information Security Report. PitchBook subscribers can also explore the full infosec market map with details on more than 2,000 companies.

Network security companies fall into three subsegments:
  • Cloud security: Software platforms that defend against breaches of public cloud environments.
  • Secure networking: Software-based secure network architectures beyond conventional firewalls and networking equipment.
  • Network detection & response: Platforms that detect risk exposure in network traffic and identify attempts to breach secure systems.

Of these, cloud security has grown the fastest. VC investment in the segment swelled from $661 million in 2020 to more than $3.5 billion in 2021, according to PitchBook data. And spending on cloud security grew faster than any other area of information security from 2020 to 2021, according to research company Gartner.
Companies that make software to securely access the cloud from anywhere are riding a tailwind of enterprise demand, said Brendan Burke, an emerging tech analyst at PitchBook.

A handful of leaders in the cloud security segment have gained prominence with massive valuations: Last year, Lacework was valued at $8.3 billion, Netskope at $7.5 billion and Wiz at $6 billion.

The increased spending and investment in the sector are in large part a response to the rise in threats to cloud-based infrastructure and services. Highly public events like the SolarWinds attack laid bare how vulnerable even leading companies are to cybersecurity threats in the cloud.

Another factor that has contributed to cloud security demand is the rise of hybrid and multicloud environments, which add complexity to security considerations, Burke said.

Read more: 2021 Annual Information Security Report

Featured image by Mara Potter/PitchBook News


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