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Interest in IT Security Venture Capital Deals, 2007 – 2014 YTD – December 2014

by Emily Forbes

  • 11 Dec 2014
  • PE
  • VC

According to Preqin’s Venture Deals Analyst online service, there have been 1,068 venture capital financings since 2007 for companies operating in the IT security sector, with an aggregate value of $8.5bn. With ever-increasing amounts of company data, demand for IT security will increase proportionally, as it remains paramount to businesses looking to protect valuable information. Preqin data reflects the growing interest in the industry, as the number and aggregate value of IT security deals has increased year-on-year since 2009, a year that saw 85 IT security venture capital deals completed worth an aggregate $0.4bn. In comparison, 199 IT security venture capital deals were completed in 2014, worth an aggregate $2.3bn, representing a 134% increase in the number of deals completed and a 475% increase in the value of completed deals in the sector. In relative terms, investments in IT security firms have accounted for 3% of both the number and aggregate value of venture capital financings globally in 2014 to date.

Of the 199 IT security deals completed in 2014, 46 have been Series A deals, making this the most common stage of investment in this sector. More deals at this stage have been completed than in any other year since 2007; the figure is up 21% from 2013. However, with an aggregate value of $391mn, Series C deals represent the most significant stage in terms of value, accounting for 17% of the total aggregate value in the sector and surpassing the $342mn recorded for Series A deals. The aggregate value of Series C investments has increased significantly from 2013 to 2014 YTD, with a rise of 133%.

North America-based firms dominate venture capital investment in the IT security industry, representing 78% of the number of deals (828) and 87% of aggregate value ($7.4bn) in all regions since 2007. The number of IT security deals in Greater China peaked in 2010, when eight deals took place with an aggregate value of $53mn. The number of deals in Greater China as a proportion of all deals has decreased from 7% in 2010 to 2% in 2014. Israel has seen an increase of four and two percentage points in number of deals and aggregate value respectively from 2013 to 2014 YTD, making this year one of its most successful since 2007. The country now represents 7% of the number and 3% of the aggregate value of IT security venture capital deals.

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