2023 #CISOPredicts: Oren Yunger, Partner at GGV Capital
Members of Silicon Valley CISO Investments (SVCI) offer their take on the challenges and trends that will shape 2023.
As Chief Information Security Officers (CISOs) across industries including tech, insurance, and retail, we have the benefit of sharing (and comparing) our perspectives on a variety of hot-button issues. As members of Silicon Valley CISO Investments (SVCI), we also get a front seat to the most recent cybersecurity innovations by advising and investing in the next generation of startups—and using our decades of expertise to help them thrive.
From where we sit in the C-suite, here’s our take on the trends and challenges that will shape 2023:
Partner, GGV Capital
M&As will mark a fresh entrepreneurial start for founders
In 2021 alone, investors poured close to $30 billion into 1,000-plus cybersecurity deals—making it a record-breaking year for cybersecurity startups. Suddenly, every other company was funded like the next CrowdStrike, with rounds in excess of $100 million becoming the new norm.
But 2023 starts on a starkly different note. With a recession looming, the landscape is changing for cybersecurity startups. The pursuit of acquiring new customers and expanding is becoming more challenging in this new macro environment: IT budgets are receiving more internal scrutiny than in previous years, and all leaders and departments are being impacted, including chief information security officers (CISOs).
Even so, companies still understand that cybersecurity is unique: it has zero tolerance for mistakes, and cyber criminals are not holding back in times of global difficulties. So it’s no surprise that cybersecurity spend is estimated to increase amid recessionary headwinds, with Gartner predicting global spending on security and risk management to grow 11.3% in 2023. But at the same time, CISOs need to justify decisions and articulate benefits more than ever before. Therefore, we predict buyers in 2023 will prefer integrated platforms versus point solutions, since these allow them to avoid lengthy (and costly) deployments, maintenance, and staff specialization.
In a recession, every new customer win will become more difficult for cybersecurity startups, as buyers will apply mounting pressure to reduce deal costs. Not all cybersecurity startups will prevail. Therefore, it might make sense for some startup founders to seek the M&A route: they can keep running their company within a larger organization, effectively continuing the entrepreneurial journey under a new umbrella. Under the right leadership, startup founders can run a semi-independent product unit that will allow the smaller org to stay nimble and innovate while benefiting from the huge support of marketing and distribution of the incumbent.
After many boom years in cybersecurity and a fragmented security solutions market, consolidation of the cybersecurity space is inevitable in 2023 and beyond. This can be a good thing for CISOs who want to do business with several platform providers versus many point solutions and a good thing for larger security players. It also could be beneficial for startup founders and their teams, since it provides them with a path to keep innovating and spreading their solution in more streamlined ways.
Keep following to read additional takes on 2023 by SVCI CISOs!