Dive Brief:

• Cybersecurity funding fell by more than half to $1.9 billion during the second quarter, as fears of a recession and uncertainty in the banking sector roiled investments across technology and information security, according to a report by Pinpoint Search Group.
• Funding fell 55% from the year-ago period, when the sector recorded $4.3 billion in funding. Despite the drop in total funding, the number of funding rounds actually rose to 97, compared with 92 in Q2 last year.
• “Inflation and fear of recession are a big part of the challenges regarding cybersecurity funding declines,” Mark Sasson, founder and managing partner at Pinpoint Search Group, said via email. “Investment costs went through the roof almost overnight due to inflation concerns and the subsequent hike in interest rates.”

Dive Insight:

Pinpoint, an executive search firm, has closely tracked hiring trends and other economic impacts in the cybersecurity market. 

In recent months leading cybersecurity providers including CrowdStrike and Microsoft have reported that enterprise customers are looking to consolidate the number of vendors they work with. 

While some of this was related to overall cost cutting, there were larger issues at play in terms of simplifying the number of different security apps they use. Many of those applications do not effectively communicate with each other, often leading to false security alarms, which can create fatigue among security operations teams. 

Seed funding dominated in Q2, taking up nearly 45% of all funding during the quarter. The average seed investment was $5 million during the quarter. 

The turmoil in capital markets led other companies like Dragos to enact difficult job cuts.