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Are Cybersecurity Startups Recession-proof?   Featured

While conventional wisdom holds that the cybersecurity sector as a whole is recession-proof, industry experts warn that the same isn’t true for individual startups.

financial crisis 544944 640 smallAs CRN reports, some cybersecurity startups may come under pressure in tough economic times simply because there are so many of them. According to online database CyberDB, there are currently 3,000 cybersecurity vendors, the vast majority of which offer particular tools rather than a broad platform.

Gil Shwed, co-founder and CEO of Check Point Software Technologies, predicted “some rationalization of the market.” He told CRN that if more challenging economic conditions start requiring some security vendors to become profitable to keep the lights on, many will be forced to shutter if they can’t find a buyer.

CRN notes that Israeli email security vendor Cyren said in February that it would close down due to “current market conditions and associated challenges with raising additional capital.” Cyren also cited a lack of an imminent acquirer.

Andrew Morris, founder and CEO of threat intelligence firm GreyNoise, recently tweeted, “Lots of cybersecurity companies are going to fail this year.” Morris added that the culling could be “a good thing for the industry over the mid to long-term,” contending that many startups have been propped up by a “new wave of more naive VCs [who] are incredibly inexperienced at diligencing cybersecurity technologies.”

As Tech Target reports, cybersecurity job security and the wider industry should still be well placed to withstand potential economic turmoil, thanks to a talent shortage and the rise of cybersecurity on corporate priority lists. That said, a recession could lead to an influx of new workers from other industries and a tightening of security budgets.

Chief information security officers should act today to be ready to do more with less, Rockwell Automation CISO told CSO. “Where there is digital transformation,” Darden Ford said, “there is security transformation.”

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