Anthony Platt, co-Head of Technology at finnCap Cavendish writes:
I tend to see it as the ultimate computer game. It pits good versus evil and is played daily on screens around the world. Adversaries bid to outmanoeuvre each other and the prize pot for either side can run into millions of dollars. But this is no recreational sport. I’m referring to one of the biggest trends in cybersecurity – threat intelligence – and it’s accruing considerable investment interest.
Hackers combine simple tools and procedures, including social engineering, to deliver payloads like malware behind firewalls and into most networks, enterprises, and institutions. The number and frequency of cybercrimes have seen significant growth and show no sign of abating. According to Dataprot, in 2022 global businesses faced a ransomware attack every 11 seconds – a 20% increase on 2019. Research by CyberSecurity Ventures has predicted the cost of cybercrime will be more than $10 trillion by 2025.
Any Chief Information Security Officer (CISO) will tell you that the threat landscape is constantly evolving and must be monitored in real-time. The inexorable rise of data, once lauded as ‘the new oil’, is now an organisation’s biggest headache and area of risk for C-suite executives. IBM in their ‘Cost of a Data Breach’ report calculated the average cost of a breach surpasses $4m. This includes forensic costs, lost business, reputational damage, regulator fines, and more.
Hackers – and I should add that these can be state-sponsored or simply bedroom vigilantes – are invariably one step ahead; simply putting up a firewall, monitoring the internal network, and waiting for an attack is not enough. Businesses need to understand the enemy and the threats they pose daily. Indeed, if companies do not take the necessary steps, they can be liable for financial penalties that can soar into the millions, not to mention the reputational damage that is levied on poorly protected organisations, not least those that handle vast amounts of sensitive and/or personal data.
With so much at stake, I see that corporate activity in the cybersecurity market, in particular threat intelligence, is heating up in kind.
In the next four years, the cybersecurity threat intelligence market is expected to grow threefold. I see the upsurge as being due to many different factors. For a start, remote working has increased network vulnerability with bad actors taking advantage. Meanwhile, geopolitical events have seen increased tensions between Russia and China, which are two of the key sponsors of state-backed hacking groups.
I recently spoke with Kevin McMahon, CEO of the growing UK-based threat intelligence platform, Cyjax. Kevin comments: “I think threat intelligence – shared widely in an organisation – raises security awareness, reinforces security policy, and is a powerful way of building a robust security culture. Properly leveraged and operationalised, it can ‘side-step’ impactful cyber-attacks on the organisation and support the business case for the adoption of improved cyber security controls.”
Organisations need intelligence platforms to be proactive – offering valuable insight to identify the threat actors, the various risks they pose, and actively helping organisations to address these threats.
We are starting to see convergence, as cybersecurity vendors and service providers move from delivering network-based security solutions, into attack surface monitoring and further into threat intelligence.
Key transactions include Thoma Bravo’s investment in Intel 471, Cybersixgill’s $50m Series B fundraise, Reliaquest’s acquisition of Digital Shadows for $160m, and IntSights being acquired by Rapid 7 in July 2021 for $335m.
Deal activity and valuation multiples in the sector have been surging, because of the pandemic-fuelled rise in cyber threats. To date, the investment in the sector has very much focused on high-growth US threat intelligence providers.
Here at finnCap Group, we’re seeing significant opportunities for investment focused on innovative UK players leveraging access to social media forums and dark web marketplaces, to equip businesses with intelligence and monitoring on threat actors and malware attacks. If you’re a company operating in this space or looking to make investments/ acquisitions in threat intelligence I’d love to hear more about your future plans.
The world of threat intelligence evolves rapidly but the opportunities are vast in the field for proactive firms that are truly staying ahead of the game.