In the first half of the year, the number of cybersecurity startups in Russia doubled compared to 2022
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In January-June, the number of startups in the field of cybersecurity in Russia doubled compared to the whole of 2022, the direction began to occupy 6% of the market of young companies, calculated in the MTS StartUp Hub. The leader among FinTech startups, which replaced the previously popular advertising technologies. So far, the number of new deals in the market as a whole lags behind the indicators of 2022, but many teams are just starting to announce projects. Investments in information security startups will grow in the near future, the market is waiting for consolidation, its participants believe.
According to MTS StartUp Hub analysts (a structure of the MTS Group) for the first half of the year, cybersecurity for the first time entered the top three most popular industries in the domestic startup market: their number in the segment doubled compared to all of 2022. Analysts do not disclose absolute indicators.
The largest number of startups in Russia, according to the MTS StartUp Hub, is still being launched in the field of FinTech (15.6%), another 11.9% falls on projects in the fields of medicine and health, and cybersecurity occupies 6% of the market. In 2022, the most popular areas were technologies in advertising (AdTech, 10%, in 2023 – only 5%) and FinTech (7%). In general, according to the study, 24% of startups now have a finished product and mass sales, 33% have launched a prototype, the rest are at the development stage. Estimates are based on MTS StartUp Hub data on 7,000 domestic startups.
The growth of interest in the development of products in the field of cybersecurity can be explained primarily by the departure of a number of foreign vendors, which lowered the threshold for entering the market, Dmitry Kurin, Director of Innovation and Investment at MTS, explains: “Secondly, a number of related industries, for example, the Internet of things or cloud services have reached the stage of product maturity.
The volume of transactions in the field of cybersecurity on the “exit” of startups (attracting funding to a project during which shareholders sell their shares to an investor) for June 2023 amounted to $3.55 million, follows from Venture Guide data. In general, from January to June, 35 transactions were concluded on the Russian venture investment market for a total of $33.1 million. This is 63% less in number than in the same period last year, and 96% lower in terms of investment.
Last year, in general, the segment of innovative projects in Russia experienced a strong decline. Experts called the lack of investment capital in the industry, as well as the need to undergo strict certification of all products, barriers for the development of startups in the field of cybersecurity (see Kommersant of October 14). The fall in investment in cybersecurity startups was largely due to the general decline, notes Sergey Nefedov, investment director of the Voskhod fund: “Many companies are just now coming out of the hidden mode and are starting to announce projects.”
If in 2022 there was a demand for quick solutions to the problems of import substitution and the main request was addressed to companies already operating on the market, now the IT industry is starting to experience the rise of new projects, Timofey Khoroshev, partner and leader of the technology consulting practice at DRT, believes: “In the field of cybersecurity, with On the one hand, over the past few years there has been a worldwide trend towards an increase in interest in the topic, on the other hand, there is a demand for domestic information security systems in the context of import substitution.
At the same time, Igor Kheresh, Director of the Asset Management and M&A Department at RTK Solar, notes that, despite all the favorable factors for the development of companies in cybersecurity (increased threats of attacks, withdrawal of Western vendors, business digitalization), there are doubts about the dynamics of the number of developers : “The volume of young technology companies in the field of information security is still quite modest.” In his opinion, the growth of investment in domestic information security solutions will continue, but in the future it will focus on a few solutions that will win the competition. The expert expects a reduction in the total number of startups and industry consolidation.
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