Trends Report

VC Trends In IT Security

An Analysis Of 2008 Investment Activity

March 10th, 2009
Jonathan Penn
With contributors:
Thomas Mendel, Ph.D. , Reedwan Iqbal


VCs generally started the year with optimism. As the economy worsened, however, VCs reacted first by curtailing activities and then by adapting their strategies to the new reality. Fortunately, the recession is affecting IT security less than other IT sectors, and VCs are now starting up their activities again. Most of their attention will go to supporting existing portfolio companies — helping successful ones seize opportunities to expand, and helping the less successful get through these tough times. New investment is picking up again and will focus on virtualization security, providing security to SaaS and cloud services, data security, and antifraud. Established, successful IT security vendors with cash on hand should respond to the changes in VC strategies and the valuation climate by rooting out attractive acquisition targets for measured expansion into new markets or the addition of strategic technologies that will bring competitive advantage.

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