There are signs and portents that the cyber security industry has received a rap on the nose with a rolled-up newspaper and seeing a downturn in business interest.
A new report from Progress Partners, a Boston-based investment bank, claims that venture funds invested in cybersecurity companies declined in the third quarter compared with the same period last year, to $3.3 billion from $5.6 billion, or by 41 percent.
The pullback comes amid uncertain economic times, with market gyrations, high inflation and predictions of a coming recession dominating recent headlines.
Progress Partners’ VC outlook generally confirms what other analysts are seeing: a cooling-off of early stage cybersecurity investments in dollars but an increase in deals.
But this appears to be part of a wider downturn in the cyber security industry, with companies slowing hiring or actually laying people off.
The impact was first felt more in the cybersecurity sector than tech as a whole, with a host of startups and some mature cybersecurity companies undergoing layoffs in the last few months. But those initial layoffs have spread to other tech firms in autumn.
Forbes warned that some businesses, when evaluating risks were making the mistake of eliminating the costs that don’t directly affect production. Those companies who have never experienced a cyber threat are saying that this is an area they can save cash.
