Funding has increased by a staggering 940% for UK cybersecurity startups since the beginning of lockdown, with £496m being raised in the first half of 2020, almost outstripping the 2019 total of £521m. These figures from government-backed cybersecurity programme, LORCA, show that investors have been quick to put their money towards startups specialising in cyber risk management, as the pandemic forced CEO’s to look beyond just financial or regulatory risk.
The findings come from a new report by global recruiter Robert Walters and data provider VacancySoft, Cybersecurity: Building Business Resilience, which claims that business spending on cybersecurity will double to £136bn this year.
Darius Goodarzi, Principal, Information Security and IT Risk at Robert Walters, comments: “For years the UK has been building its reputation as a beacon of innovation and investment in cybersecurity. This year in particular cybersecurity startups have risen to become business heroes, from tools that alert users to security vulnerabilities, to those that spot fraudulent activity. These news firms and tools have taken an important role in protecting our ‘new world.”
According to the governments Cyber Security Sectoral Analysis 2020 there are 1,221 firms active within the UK providing cyber security products and services, a 44% increase in the last two years, indicating that a new cyber security business is registered every week within the UK. Of this, 90% of the sector consists of SMEs with an associated estimated turnover of £2bn (24% of the sector’s revenues).
|Top 10 funded cybersecurity startups in the UK (Beauhurst)|
|Total Funding to date|
Ajay Hayre, Senior Consultant Technology at Robert Walters comments: “Historically IT security has represented only 5% of a company’s IT budget but due to remote working and transition to online or cloud-based solutions, cybersecurity has been thrust to the centre of business continuity plans, having proved its worth in enabling business objectives during lockdown. Not only will every company see the benefit of having this expertise in-house, but they will be looking externally for tools, services and advisors to help guarantee the future-proofing of their business by way of solid and robust cybersecurity provisions.”
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Demand for Consultancies
With 48% of UK companies stating they do not have adequate cyber security to enable long term remote working, and a further 70% of companies across Europe admitting that they do not have a sufficient cyber security team in general, it seems the race is on to hire talent in this area, with job vacancies growing by 6% in the UK for the first half of this year.
However with a talent shortage across the continent of 140,000, companies are being left with no choice but to turn to cybersecurity consultancies. In fact, such is the demand that cybersecurity consultancies are one of the fastest growing startups in the UK now at 1,000 companies with the average number of employees being just 10.
Adam Casey, Managing Director at i3Secure, a UK-based Cyber Security and Data Protection consultancy comments: “The pace at which companies are having to undergo digital transformation means security projects will be rife, add to that a period of ‘rationalisation,’ where firms will need to check whether what they fitted ‘overnight’ is totally secure and fit for purpose. As a result, one of the main drives for cyber security over the next 12 months will be to amend and create sustainable and secure systems.
“With this, a trend we expect to manifest is an increase in ‘Cyber Audits’ performed by specialist external providers, as a way of helping companies test their resilience and identify vulnerabilities. Companies are increasingly out-sourcing projects to these new & exciting firms promising efficient project delivery, in place of hiring a CISO and in-house team at a significant cost to the company.”
The North is Rising
Unlike the tech sector as a whole, where 80% of VC funding goes to London and just 20% to the rest of the UK within cybersecurity the success is nationwide, with 55% of the UK’s cyber startups based outside of London. In the North West of England, the number of cybersecurity startups has more than doubled in the past two years from 39 registered firms to 80.
This is also prevalent in hiring patterns, where traditionally London has been the centre for IT security hiring; representing 41% of total jobs in the UK, roles are emerging more evenly across the country. In fact, year-on-year cybersec roles in Yorkshire and the North East have exploded by +138% with the region now making up 18% of overall cyber security hires.
Ahsan Iqbal, Director of Technology at Robert Walters, comments: “With part-remote working here to stay for the foreseeable, removal of geographical barriers is allowing companies to make tactical hires outside of London. Not only is cost saving an advantage here, but the North has built up a reputation for its highly skilled and experienced pool of tech talent.”