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A new study out today from venture capital firm Acrew Capital has found that cybersecurity startup exits now demand record-high revenue and funding.
The finding comes from the Exit Escape Velocity for Cybersecurity Startup study, which found that the financial scale required for successful exits has increased dramatically over the past three decades. The report identifies five distinct eras — Dot-Com, Pre-Financial Crisis, Post-Financial Crisis, COVID and Post-COVID — each marked by shifts in revenue expectations, funding requirements and exit timelines.
One of the key findings in the study was the exponential rise in annual recurring revenue benchmarks. Companies that exited during the COVID era averaged $194 million in trailing twelve-month revenue, while startups expected to exit in 2025 are projected to reach $375 million, nearly double the previous benchmark.
Venture funding requirements were also found to have ballooned, reflecting the capital-intensive nature of cybersecurity startups today. The study found that while companies in the Dot-Com Era raised an average of just $6 million before exiting, that number jumped to $301 million during the COVID era, with private cybersecurity startups now averaging $717 million in funding.
The increasing financial demands on cybersecurity startups reflect the expectations of both investors and acquirers. At a time when cybersecurity threats are becoming more widespread and complicated to deal with, the study suggests that cybersecurity companies today must not only demonstrate strong revenue growth but also robust security innovation to justify their valuations and attract exit opportunities.
At the same time, the competitive landscape has also intensified, with more startups entering the market and raising substantial capital to scale up quickly. The new startups have contributed to larger funding rounds and higher valuations but have also meant that only the most well-funded and strategically positioned companies can successfully reach initial public offerings or acquisitions.
Despite these increasing financial thresholds, surprisingly, the time to exit has remained relatively stable over the past decade. Since the Post-Financial Crisis era, cybersecurity startups were found to have taken an average of 11 to 12 years from founding to exit, suggesting that while scaling has become more capital-intensive, the overall journey to IPO or acquisition has not significantly lengthened.
The study adds that modern cybersecurity startups must operate at an unprecedented scale to achieve successful exits. With market expectations rising, securing substantial venture backing and demonstrating high-growth potential have become essential factors in navigating today’s cybersecurity landscape.
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