The Expert's View with Michael Novinson

Next-Generation Technologies & Secure Development

Will Cybersecurity Get Its 1st New Unicorn Since June 2022?

Data Security Startup Cyera Seeks to Raise $150M to $200M at a Valuation of $1.55B
Will Cybersecurity Get Its 1st New Unicorn Since June 2022?
Cyera co-founder and CEO Yotam Segev and co-founder and CTO Tamar Bar-Ilan (Image: Cyera)

The deep freeze in cybersecurity startups reaching unicorn status could at last be thawing.

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Ten early-stage security vendors achieved a valuation of more than $1 billion - or unicorn status - prior to October 2020 and remain privately held today, according to CB Insights. Then, in a COVID-era boom spanning from October 2020 to June 2022, a whopping 48 cybersecurity startups received their unicorn horns, CB Insights found.

But after the financial boom went bust, previously minted unicorns started shedding their horns as investors began penalizing startups for running massive losses on small amounts of revenue. In this new economic era, investors evaluate prospects on performance, not potential (see: What Happens When Cybersecurity Unicorns Lose Their Horns?).

The first cybersecurity unicorn to lose its horns was Cybereason. The company's valuation fell from $3 billion in July 2021 - when it raised $275 million from former U.S. Treasury Secretary Steve Mnuchin's venture fund - to just $300 million in April 2023, when it closed a $100 million Series G round led by SoftBank. During that time, Cybereason conducted mass layoffs and replaced founding CEO Lior Div.

In June 2022, Perimeter 81 completed a $100 million Series C funding round at a $1 billion valuation. But 15 months later, the New York-based security service edge vendor was sold to Silicon Valley-based platform security vendor Check Point for just $490 million.

After 21 months of belt tightening, it appears the tide could at last be turning. Business Insider reported Tuesday that Cyera is raising between $150 million and $200 million in a new funding round that would value the Silicon Valley-based data security startup at as much as $1.55 billion. The funding talks come just nine months after Cyera closed a $100 million Series B round at a reported $500 million valuation (see: Cyera Raises $100M to Bring Data Protection to Hybrid Cloud).

Why Cyera Might Break Cybersecurity's Unicorn Dry Spell

Cyera was co-founded in 2021 by Yotam Segev and Tamar Bar-Ilan, who both spent nearly a decade in the Israeli military. Segev became head of Unit 8200's cyber department. The company in March 2022 received $60 million in Series A funding led by Sequoia Capital. The company declined an Information Security Media Group request for comment.

The company's headcount has nearly tripled from just 71 workers in March 2023 to 204 today, according to IT-Harvest. More than 9 in 10 Cyera employees are based in Israel, and most of the remaining ones work from the United States. Roughly 40% of Cyera's workforce is in engineering, 40% is in sales, 15% is in operations and the remaining 5% are in human resources, IT-Harvest found.

IT-Harvest estimates that over the past year Cyera generated $35 million in sales - or more than $185,000 per employee - and predicts the company's revenue will grow by $4.3 million - or 12.3% - over the next quarter. The firm has since June pushed into Europe to address data localization and residency needs and enhanced its ability to support the cloud and on-premises data protection needs of hybrid clients.

Cyera's plan to continue as an independent entity stands in marked contrast to four of its data security posture management competitors, all of which exited the market over the past year through acquisition. First, IBM in May 2023 acquired Polar Security to help organizations avoid exposing sensitive data in public cloud data stores or popular SaaS apps such as Slack, SharePoint and Office 365.

Three months later, Rubrik bought Laminar to provide visibility into where a company's data lives and who has access. Then in December 2023, Palo Alto Networks purchased Dig Security for $255.4 million to gain visibility into and control of its multi-cloud data estate. And earlier this month, CrowdStrike agreed to buy Flow Security for $115 million to more clearly see how cloud data moves and interacts with apps.

But for Cyera, the quest to defy the laws of economic gravity continues.

About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.

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