Cybersecurity Startups: Four Questions VCs Will Ask Before Investing
September 20, 2021
Over the past year, venture capital funding has been accelerating at a record pace. Through Q1 and Q2 2021, companies worldwide raised $288 billion from venture capitalists, the most ever through the first half of a year. Cybersecurity companies are no exception to this trend, with an influx of nearly $8 billion in funding through the first half of this year, compared to $7.8 billion raised by cybersecurity organizations in all of 2020.
While funding has reached unprecedented availability, securing those investments is not as simple as setting up a Zoom call and getting a term sheet. In my experience, security companies seeking financing must be able to answer these four questions from the VCs:
How are you different from other security companies?
The adage “to thine own self be true” is applicable here. Overselling who you are could help land an initial investment, but doing so can create expectations you cannot fulfill.
Understand your market and highlight what you do better than anyone else in that space. For example, explain the asset you’re trying to protect, identify the kind of attack you will help prevent and highlight how you do it better than anyone else.