New CyberTech Investments Maintain Momentum at Near Record Level
Investments levels in CyberTech companies held up despite — or maybe even because of — the pandemic
According to our research at RegTech Analyst and FinTech Global, investors continued to commit to CyberTech companies despite the restrictions on business activities caused by the COVID-19 pandemic. Indeed the ever-escalating levels of cyber threats, which have been further compounded by the dramatic increase in home working and the surge in online transactions, appear to have sharpened the appetite of investors for new CyberTech innovators.
Global CyberTech investments almost kept pace with the record level seen in 2019
An analysis of investments in third-party CyberTech companies that address threats faced by the financial services industry shows that $2.2bn was committed to 111 deals in H1 2020. That’s not far from equalling half the total capital of $4.7bn and half of the 229 deals seen in the whole of 2019.
The total for H1 2020 was actually greater than the total of $1.8bn for the whole of 2018, which provides evidence for what we think will be, by necessity, an inexorable long-term growth trend.
Early stage CyberTech innovation and investment remain strong
An interval analysis of deal size for H1 shows that early stage activity has certainly not, so far, been held up by COVID-19 restrictions.
Deals of size below $1m more than doubled their share, compared to 2019, reaching 19.3%. which is close to the five-year average of around one-fifth share. At the larger end of the market, deals of size over $50m continued on their solid growth trajectory. H1 saw these large deals take 15.9% which is a significant increase on 2019, at 12.9%, and a dramatic increase on 2016, which was only at 1.1.% share.
Asia has seen a surge in CyberTech investments in 2020
The most obvious trend to be seen from a regional analysis is the explosive growth of share taken by Asia, which more than tripled from 4.7% in 2016 to 5.3% in H1 2020.
The US has maintained dominance of the CyberTech market in terms of share of deals over the last five years, taking between a half and two-thirds of all deals globally. It also dominates the premier league in terms of large deals: eight of the top ten biggest deals in the first half of the year involved investments in US-based CyberTech companies. In all, the top ten deals took over two-thirds of all capital invested (see FinTech Global for details).
Europe has has kept hold of second place but its share more than halved from its peak of 32% in 2018 down to 14.4% in H1 2020.
Whilst it is proving difficult, if not close to impossible, for companies to predict how the economy will recover from the consequences of the current pandemic, it is possible to be certain that cyber threats will increase no matter what. Hence the growth in CyberTech innovation and investments will necessarily continue apace.
