After several quarters of decline, cybersecurity funding is bouncing back. Venture capital investment into cybersecurity startups reached $2.7 billion in the first quarter of 2025. That marks a 29% increase from the end of 2024, according to Crunchbase data. While the number of deals dropped, the overall dollar amount raised remained strong—just slightly under the $2.8 billion recorded in Q1 last year.
However, deal flow told a different story. Only 139 funding deals closed in Q1, a sharp decline from over 200 during the same period in 2024. Compared to Q4, which saw more than 150 deals, the slowdown is noticeable. But the investment momentum, driven by larger rounds, seems to be gaining traction again.
A major factor in this quarter’s funding spike was Google parent Alphabet’s announcement that it plans to acquire Wiz, a cloud security unicorn, for $32 billion. The deal stands as the biggest acquisition of a VC-backed company to date, sending a clear signal that cybersecurity remains a prime target for growth and returns.
AI and Platform Players Shape the Future of Cybersecurity
Industry analysts believe the Wiz acquisition will push more VCs to explore the space, especially as new technologies like agentic AI start reshaping cybersecurity operations. Thomvest Ventures’ managing director Umesh Padval says AI-driven automation is now essential. These tools help security teams resolve incidents faster and operate more efficiently within enterprise environments.
Padval also expects a shift in the type of startups attracting funding. While the total number of new entrants may decline, broader platform-based companies and mature players expanding their offerings are likely to dominate.
This trend is already reflected in some of Q1’s largest funding rounds:
- In February, NinjaOne—a company offering endpoint management and monitoring—raised $500 million in a Series C extension at a $5 billion valuation. That’s double its value from a year earlier, with Iconiq Growth and CapitalG backing the deal.
- In March, Island, a Dallas-based enterprise browser startup, closed a $250 million Series E round at a $4.8 billion valuation. Aura, based in Boston and focused on family cybersecurity, pulled in $140 million in equity and debt during a Series G round, reaching a $1.6 billion valuation.
While late-stage dealmaking is slowing down, early-stage activity remains hot. According to Ofer Schreiber of YL Ventures, Series A and B rounds are still competitive for startups that can show real traction. Yet, he cautions that many large VC firms are already heavy on cybersecurity, creating saturation in some subsectors. That means newer startups may find it harder to attract quality investors who want to avoid overlapping their portfolios.
Despite global tensions and a cautious market outlook, cybersecurity funding appears to be holding its ground. Whether this momentum lasts will depend on how the broader economy unfolds—but for now, the industry is regaining strength.
