Key Takeaways
- • Mega-deals dominated Q3 2019 cybersecurity VC: SoftBank's $200 million investment in Cybereason and OneTrust's $200 million Series A round led by Insight Partners anchored a strong quarter for both deal volume and deal value in the cybersecurity sector.
- • Mid-stage funding remained active: Kenna Security raised $48 million in Series D funding (September 30) with participation from Bessemer Venture Partners, U.S. Venture Partners, and new investors Sorenson Capital and Citi Ventures, signaling sustained institutional confidence in maturing cybersecurity startups.
- • Seed-stage diversification across verticals: Smaller funding rounds reflected emerging specialized niches—ShieldIOT ($3.6 million, IoT security), Cowbell Cyber ($3.3 million, insurance-linked cybersecurity), and CyberFortress ($3 million)—indicating investor appetite for vertical-specific security solutions.
- • September deal flow remained robust despite absence of mega-rounds: While no deals exceeded $200 million in September, deal volume picked up substantially, with six distinct funding announcements across seed and Series A/D stages, suggesting healthy pipeline momentum heading into Q4.
- • Diverse investor participation: Rounds featured a mix of specialized cybersecurity venture funds, strategic corporate investors (Citi Ventures, Innogy Innovation Hub), and traditional venture capital firms (Lightspeed Venture Partners, Founders Fund), indicating healthy ecosystem participation.
Summary
Q3 2019 demonstrated substantial momentum in cybersecurity venture capital, characterized by high deal value anchored by two landmark $200 million investments. SoftBank Group's $200 million investment in Cybereason opened the quarter strongly, followed in August by OneTrust's $200 million Series A round led by Insight Partners. This dual mega-deal structure underscored institutional appetite for mature cybersecurity plays, despite a September pause in nine-figure transactions.
The quarter's funding landscape extended beyond headline mega-deals to mid-stage and seed-stage activity, reflecting sustained investor confidence across maturity bands. Kenna Security's $48 million Series D round on September 30 attracted both returning investors—Bessemer Venture Partners, U.S. Venture Partners, Costanoa Ventures, and Hyde Park Angels—and new institutional capital from Sorenson Capital and Citi Ventures. This signaled confidence in later-stage companies approaching scale. Arceo.ai, described as a specialized security platform, secured $37 million led by Lightspeed Venture Partners and Founders Fund on September 25, further demonstrating strong mid-market activity.
Seed-stage funding highlighted vertical specialization emerging within cybersecurity. ShieldIOT (September 23) raised $3.6 million for IoT security solutions with backing from Innogy Innovation Hub, the venture capital arm of Berlin-listed Innogy SE. Cowbell Cyber (September 24) secured $3.3 million targeting insurance-linked cybersecurity from thematic venture funds including ManchesterStory Group and the Global Insurance Accelerator. DataGrail announced a $4 million Series A on September 20 with Cloud Apps Capital Partners as lead. These smaller rounds underscored investor focus on niche, defensible security verticals rather than horizontal platforms.
Overall, Q3 2019 exhibited balanced market dynamics with September's recovery in deal volume offsetting the absence of mega-rounds that month. The quarter closed with a "promising outlook" for Q4, according to the VC Report, indicating sustained momentum in both capital deployment and founder fundraising activity within the cybersecurity sector.
The quarter's funding landscape extended beyond headline mega-deals to mid-stage and seed-stage activity, reflecting sustained investor confidence across maturity bands. Kenna Security's $48 million Series D round on September 30 attracted both returning investors—Bessemer Venture Partners, U.S. Venture Partners, Costanoa Ventures, and Hyde Park Angels—and new institutional capital from Sorenson Capital and Citi Ventures. This signaled confidence in later-stage companies approaching scale. Arceo.ai, described as a specialized security platform, secured $37 million led by Lightspeed Venture Partners and Founders Fund on September 25, further demonstrating strong mid-market activity.
Seed-stage funding highlighted vertical specialization emerging within cybersecurity. ShieldIOT (September 23) raised $3.6 million for IoT security solutions with backing from Innogy Innovation Hub, the venture capital arm of Berlin-listed Innogy SE. Cowbell Cyber (September 24) secured $3.3 million targeting insurance-linked cybersecurity from thematic venture funds including ManchesterStory Group and the Global Insurance Accelerator. DataGrail announced a $4 million Series A on September 20 with Cloud Apps Capital Partners as lead. These smaller rounds underscored investor focus on niche, defensible security verticals rather than horizontal platforms.
Overall, Q3 2019 exhibited balanced market dynamics with September's recovery in deal volume offsetting the absence of mega-rounds that month. The quarter closed with a "promising outlook" for Q4, according to the VC Report, indicating sustained momentum in both capital deployment and founder fundraising activity within the cybersecurity sector.
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