With $3.7 billion raised in cybersecurity funding so far this year, 2021 is on track to overcome last year’s record $7.8 billion total. Many of these companies have very high valuations – and to some experts that sounds like a bubble.
As damage from hacking to businesses and individuals gets worse each year and as new threats emerge, new technologies are being developed to protect organizations, leading investors to pump more money into the industry.
The fact that a cybersecurity company is able to raise money in an era in which investors are looking to give away their cash is no indication of the quality of its work and is no indication that the company will be around for the long-term.
How can investors differentiate between a “value” cyber company and one that is getting “swept along” by the general market valuation uptick? What signs should they be looking for to indicate that they are getting true value for their investment money and how can investors differentiate between value investments and “bubble” investments?