VCs face slowdown in information security

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The Daily Pitch: VC

August 8, 2022

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

In today's Daily Pitch, you'll find:

Our latest Emerging Tech Research provides an update on the information security sector as startups face a slowdown in spending growth.

PE and real estate fund performance remained strong through the end of 2021, but analysts see turbulence on the horizon.

Today's Top Stories

Information security faces a slowdown

Financial volatility and a paused IPO market have combined to challenge the resilience of the information security sector. While security software spending is on track to reach $113.3 billion in 2022, a raft of economic hurdles could slow spending growth in managed services. Meanwhile, startups lack positive exit routes, creating a funding environment that favors mature companies.

Our Q2 2022 Emerging Tech VC update on information security highlights opportunities in database protection, anti-phishing platforms and more. The report also includes a market map of the industry's product categories, from application security to identity management. Other takeaways include:

VC investment in the information security space took a hit from market volatility, dropping 44.6% quarter-over-quarter to $3.2 billion.

Median late-stage VC valuations held steady from Q1, at $190 million. Early-stage VC valuations remained robust, though depressed market conditions indicate a slowdown may be looming.

The exit market virtually halted, with only 13 VC exits tracked in Q2.

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Are corporate VC 'tourists' pulling back amid the downturn?

(vovidzha/Shutterstock)

Corporate venture capital firms historically have a reputation for tightening the purse strings when faced with a downturn.

Given the current economic headwinds, will history repeat itself or will CVCs keep pace with their traditional VC counterparts?

Recommended Reads

In just over a year, the US' largest cryptocurrency exchange went from a triumphant public offering to cost-cutting and layoffs. [The New York Times]

Marc Andreessen has spoken out about the US' failure to build enough housing in the past, but do public records paint a different picture? [The Atlantic]

Is the plant-based meat revolution already running out of steam? [Wired]

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Quick Takes

	The Daily Benchmark
	2010 Vintage Global Secondaries Funds
	People
	Madrona co-founder Tom Alberg dies at 82
	VC Deals
	LiveEO bags $19M+ for infrastructure monitoring tech
	Datajoin secures $3.5M
	Fundraising
	Top Tier wraps up $925M for venture strategy

The Daily Benchmark

2010 Vintage Global Secondaries Funds

Median IRR

14.90%

Top Quartile IRR

18.14%

1.50x

Median TVPI

Select top performers

Origami Opportunities Fund I

StepStone Ohio Secondary Opportunities Fund

AlpInvest Partners Fund IV—Secondary Investments

*IRR: net of fees

12 Funds in Benchmark »

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People

Madrona co-founder Tom Alberg dies at 82

Venture capitalist Tom Alberg, a co-founder of Seattle-based VC firm Madrona Venture Group and an early investor in Amazon.com, has died at the age of 82. A lawyer and longtime leader in Seattle’s tech community, he was a senior executive in companies including McCaw Cellular Communications and the law firm of Perkins Coie. He co-founded Madrona in 1995 and went on to serve on boards of portfolio companies like Amazon and Impinj.

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VC Deals

LiveEO bags $19M+ for infrastructure monitoring tech

Berlin-based LiveEO has raised over $19 million in a round led by MMC Ventures. The startup uses satellite technology to monitor large infrastructure networks.

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View 3 competitors »

Datajoin secures $3.5M

Datajoin has raised a $3.5 million seed round led by Sepio Capital. The Utah-based company provides B2B marketing teams with a no-code solution for integrating customer data into their chosen marketing applications.

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View similar company »

Don't miss our upcoming webinar

US venture capital has been faced with market challenges in the first half of 2022, but segments of the VC ecosystem such as early-stage startups and larger VC firms have stayed resilient and continued to flourish.

In this webinar, our speakers will explore the causes behind these disparities and what they anticipate in the market's future, informed by the findings from our latest PitchBook-NVCA Venture Monitor. Key topics include:

Reviewing US venture activity from Q2 2022.
Analyzing the importance of a human capital strategy with Insperity.
Discussing developments in the venture ecosystem with J.P. Morgan.

Register now to secure your spot.

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Fundraising

Top Tier wraps up $925M for venture strategy

Top Tier Capital Partners has raised $925 million to invest in VC fund secondaries, software and technology startups, and more. Of that amount, $503.5 million is committed to Top Tier Venture Velocity Fund 4, while the remainder will be deployed alongside the fund through related separate accounts.

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View 51 investments »

Chart of the Day

Source: PitchBook's Q1 2022 Real Assets Report

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