On the face of it, the cybersecurity sector is doing simply tremendous. Demand for cybersecurity merchandise stays excessive as cyberattacks proceed to blight each public and private-sector companies, and investor enthusiasm for all issues cyber-related stays robust.
However whereas many anticipate the cybersecurity business to climate the present financial storm higher than most, not least as a result of variety of high-profile ransomware assaults and information breaches we’re seeing every week, the sector is way from immune from the mass layoffs which can be impacting each nook of the expertise business. Layoffs tracker Layoffs.fyi says nearly 13,000 tech employees misplaced their jobs in June alone, in comparison with about 2,500 this time final yr.
These layoffs are taking place regardless of startups elevating large quantities of money, with VC investments persevering with to extend year-over-year.
On Friday, IronNet, a Virginia-based community safety firm, introduced plans to let go of 55 employees, or 17% of its workforce, lower than a yr after submitting to go public. IronNet’s inventory value is down by nearly half. “The workforce discount is a part of a broader plan to streamline our operations for greater effectivity, to scale back total bills and protect money, and to set IronNet up for rationalized development going ahead,” IronNet spokesperson Joseph P. Depa III informed TechCrunch in a press release.
The layoffs at IronNet are the most recent in an extended line of layoffs throughout the sector, which final yr noticed the variety of unfilled roles improve by 350%. In addition they look like a part of a spate of reductions impacting late-stage startups, specifically, as they battle to display a path to profitability.
In June, OneTrust, a four-year-old Atlanta-based startup that helps firms handle privateness, safety, and governance necessities, lower 950 employees or 25% of its workforce. The corporate raised $300 million in a Sequence C in December 2020, at a $5.1 billion valuation.
“I do know this information is stunning, particularly as you heard final month that the enterprise is on monitor with document quarters and rising buyer demand,” mentioned OnePlus CEO Kabir Barday mentioned in an e-mail to workers. “Nevertheless, capital markets sentiment shifted to a extra balanced strategy between development and profitability, and right now, now we have determined the very best plan of action is to reorganize to place OneTrust for continued long-term success.”
Additionally in June, U.S.-Israeli late-stage cybersecurity startup Cybereason mentioned it had laid off 10% of its workforce, or round 100 employees. This got here simply months after it confidentially filed for an IPO and fewer than a yr after it raised a further $275 million in Sequence F funding.
“This was an especially troublesome resolution,” Cybereason mentioned. “Because the bullish tech market circumstances have turned and the tech IPO market has basically closed, firms like us should now train extra strict monetary self-discipline and prioritize profitability over topline development.”
June additionally noticed New York-based safety startup Deep Intuition lay off a reported 10% of its workforce, whereas safety startup Automox laid off a reported 75 folks, or about 18% of its complete headcount.
The earlier month, Lacework – a San Jose-based cloud safety supplier — laid off about 20% of its workforce of about 1,000 workers. The announcement got here simply six months after the corporate unveiled a $1.3-billion Sequence D spherical of funding, valuing the corporate at $8.3 billion. Lacework in February mentioned it has over 1,000 workers.
In a weblog publish asserting the layoffs, Lacework co-CEOs David Hatfield and Jay Parikh blamed a “seismic shift” in each the private and non-private markets: “Whereas we shouldn’t have management of the setting round us, we do have a accountability to manage how we function our enterprise and make modifications as wanted to finest place the corporate for continued and long-term success,” they mentioned.
It stays to be seen what affect, if any, the present financial storm could have on VC investments within the sector.
Information from Momentum Cyber, a monetary advisory agency for the safety business, exhibits that funding for cybersecurity startups hit almost $6 billion within the first quarter of 2022, up nearly 50% from the primary quarter of 2021; however information from Crunchbase exhibits that this $6 billion in funding marks a steep decline from the $7.8 billion invested within the fourth quarter of 2021.
Momentum’s information additionally exhibits there have been no IPOs in the course of the first quarter, and that M&A exercise is the cybersecurity sector is exhibiting indicators of slowing down: transaction worth totaled $12.2 billion for the quarter, largely due to Google’s $5.4 billion acquisition of Mandiant, down from $19.3 billion in 2021.
Whereas we’re solely midway by means of the yr and nothing is definite, it appears to be like unlikely that the cybersecurity sector will smash the information it set final yr.
