Cybersecurity: Technologies, Threats, and Business Models

The cybersecurity industry has become one of the most critical and fastest-growing sectors in technology. With digital transformation accelerating across industries, the attack surface for cyber threats has expanded dramatically. High-profile breaches, ransomware attacks, and state-sponsored cyber warfare have pushed cybersecurity to the top of corporate and government agendas. Just as military operations have adapted to face modern challenges, businesses must prioritize cybersecurity to protect sensitive data, preserve operational continuity, and maintain customer trust.

For investors, cybersecurity players exhibit strong recurring revenue models, high margins, and mission-critical demand—making them attractive targets for growth capital, buyouts, and roll-up strategies.

Technologies driving cybersecurity

The cybersecurity landscape is being reshaped by a wave of advanced technologies designed to address increasingly sophisticated and distributed threats.

  • Endpoint Detection and Response - EDR is a foundational technology in modern cybersecurity, designed to monitor and respond to threats on individual devices in real time. It enables organizations to rapidly detect, investigate, and contain security incidents at the endpoint level, often before they escalate into larger breaches. By providing continuous visibility into endpoint activities and leveraging behavioral analytics, EDR enhances threat detection and forms the backbone of proactive endpoint protection strategies.

  • Extended Detection and Response - XDR builds on traditional endpoint solutions by integrating data across endpoints, networks, cloud environments, and applications. This unified approach provides centralized visibility into security threats, enabling faster and more coordinated responses. By correlating signals from multiple sources, XDR enhances detection accuracy, reduces false positives, and alleviates alert fatigue for security teams, making it a critical tool for modern threat defense.

  • Cloud Security and Secure Access Service Edge - SASE are essential technologies for protecting data, workloads, and users in increasingly cloud-native environments. SASE combines key network security functions—such as firewalls, secure web gateways, and zero-trust network access—with wide-area networking (WAN) capabilities. This integrated approach enables secure, scalable, and low-latency access for remote and distributed workforces, aligning security with the flexibility demands of modern enterprise IT infrastructure.

  • Identity and Access Management - IAM is a critical framework for controlling and authenticating user access to systems and data. As a core component of zero-trust security models, IAM ensures that only verified and authorized individuals can access sensitive resources. It encompasses tools and practices such as multi-factor authentication (MFA), single sign-on (SSO), and role-based access control (RBAC), all of which help organizations minimize risk and enforce consistent, secure access policies across their digital environments.

  • AI-driven Threat Intelligence and Automation - It leverages machine learning to enable real-time threat detection, prediction, and analysis. By automating routine security tasks and incident response processes, it significantly reduces the workload on security teams. This approach enhances the speed, accuracy, and scalability of cybersecurity operations, allowing organizations to respond to threats more efficiently and stay ahead of evolving attack vectors.

An evolving threat landscape

The cyber threat environment is growing increasingly volatile, with ransomware attacks surging by 21% increase over last year only. The rise of Ransomware-as-a-Service (RaaS) has lowered the barrier to entry for cybercriminals, fueling a parallel boom in backup/recovery solutions and cyber insurance providers like Coalition.

Supply chain attacks have also escalated, as demonstrated by the SolarWinds and Log4j incidents, exposing vulnerabilities in third-party software dependencies. This has spurred demand for platforms that provide visibility into supply chain risks, with startups like Apiiro and JupiterOne gaining traction.

Geopolitical tensions have further intensified the threat landscape, with nation-state cyber warfare becoming a pervasive risk. The Russia-Ukraine conflict, for instance, triggered a 300% increase in state-sponsored attacks. This has driven growth for threat intelligence firms such as Recorded Future and Mandiant, which specialize in tracking advanced persistent threats (APTs).

Regulatory pressure 

Regulatory pressure is a major driver of cybersecurity investments, as laws like GDPR, CCPA, and evolving SEC rules impose strict requirements on how organizations protect personal data and disclose cyber risks. These compliance mandates compel businesses to implement robust security controls, conduct regular risk assessments, and maintain transparent reporting to avoid heavy fines and reputational damage. As regulators worldwide tighten standards, companies face increasing obligations to safeguard sensitive information and demonstrate ongoing adherence to evolving cybersecurity frameworks.

The investment framework 

Sound business models

Cybersecurity companies exhibit financial characteristics that are highly attractive. The prevalence of subscription-based SaaS models ensures recurring revenue streams with high gross margins—often exceeding 70%, as seen with CrowdStrike. Customer stickiness is another defining trait; once deployed, cybersecurity solutions become deeply embedded in enterprise infrastructure due to compliance requirements and the high cost of switching.

Upsell opportunities abound as vendors expand their platforms through modular additions. Palo Alto Networks, for example, has successfully transitioned from a firewall-centric business to a comprehensive security platform via acquisitions and organic development. This "platformization" trend enhances customer lifetime value and creates additional revenue levers.

Recent investment activity 

2025 has been very active for cybersecurity, marked by strong M&A activity, driven by both strategic acquirers and private equity firms seeking to consolidate a fragmented market. High-profile deals—such as Google’s $32 billion acquisition of Wiz, Sophos’s buyout of Secureworks, and the privatization of SolarWinds—reflect a growing appetite for cloud-native and identity-centric security platforms. With over 1,800 niche cybersecurity startups, the sector remains fragmented but is rapidly consolidating around integrated, scalable solutions that meet rising enterprise and regulatory demands.

Valuations remain elevated, particularly for companies with strong recurring revenue and high growth. Public cybersecurity firms with >20% growth trade at median EV/revenue multiples of around 10x, while slower-growing firms average closer to 4.6x. In private markets, mid-market deals are typically valued at 8–10x revenue. Key investment metrics include revenue retention, product differentiation, and platform integration, with a focus on AI-driven capabilities and compliance support.

Top private players in cybersecurity

Cyera

Offers an AI-powered data security platform helping organizations discover, classify, and protect sensitive data across cloud, SaaS, and on-premises environments; secured $540 million in a Series E at a $6 billion valuation (June 2025), with total funding over $1.3 billion and major investors including Georgian, Greenoaks, Lightspeed Venture Partners, Accel, Coatue, Cyberstarts, Sequoia Capital, and Sapphire.

Vanta

Delivers automated trust management and compliance solutions for frameworks like SOC 2, serving more than 8,000 companies; raised $150 million in a Series C at a $2.45 billion valuation (July 2024), with key investors such as Sequoia Capital, Goldman Sachs Alternatives Growth Equity, J.P. Morgan, Atlassian Ventures, Craft Ventures, and CrowdStrike Ventures.

Abnormal Security

Uses behavioral AI to defend organizations against targeted email attacks and phishing, protecting 17% of Fortune 500 companies; attained $250 million in a Series D at a $5.1 billion valuation (August 2024), totalling $546 million in funding, backed by Wellington Management, Greylock Partners, Menlo Ventures, Insight Partners, and CrowdStrike Falcon Fund.

Snyk

Provides a developer-first platform that secures applications throughout the software development lifecycle with automated vulnerability scanning and remediation; raised $530 million in a Series F at an $8.5 billion valuation (2021; current valuation $7.4 billion), funded by Sands Capital, Tiger Global, Accel, Addition, Atlassian Ventures, BlackRock funds, and Salesforce Ventures.

Huntress

Delivers managed cybersecurity and 24/7 MDR services tailored to small and midsize businesses; raised $150 million in a Series D at a $1.55 billion valuation (June 2024), with total funding of $309.8 million and investors including Kleiner Perkins, Meritech Capital Partners, and Sapphire Ventures.

The bottom line 

As technology advances and cyber threats become more complex, cybersecurity is becoming more important than ever for businesses and governments. New tools like AI-powered threat detection, cloud security, and identity management are changing how organizations protect themselves.

To us, cybersecurity offers a rare combination of defensive growth, recurring revenue, and fragmentation ripe for consolidation. The relentless escalation of cyber threats ensures sustained demand, while the proliferation of SaaS models and platformization strategies enhances profitability and scalability. In our view, the key to success lies in identifying scalable platforms with durable competitive advantages or undervalued assets in high-growth niches. As digital transformation continues to expand the attack surface, cybersecurity will remain a cornerstone of tech investing for years to come.