Security startups strive on IoT, attract venture capital

May 18, 2016 // By Julien Happich
According to market research firm Lux Research, venture capital investment in cyberphysical security startups rose 78% to $228 million in 2015, and will rise to $400 million in 2016 as rapid adoption of the Internet of Things (IoT) raises the threat to products such as connected cars, smart homes and future factories.

As organizations begin to connect their internal processes and machines to the Internet, security remains weak on account of multiple factors including cost and the lack of adequate solutions, notes the market research firm, expanding the landscape of problems, adding to known risks and offering an even bigger market for security startups.

“Connected consumer and business products have begun flooding the market, but security has been an afterthought. The world now has to figure out how to secure the multitude of things that have recently become connected,” says Mark Bünger, Lux Research Vice President and lead author of the report titled, “ Cybersecurity Venture Investment in Pervasive Computing and in the IoT .”

 “Unlike the hacking of credit card numbers and Hollywood feature films, these attacks have more dangerous consequences and threaten the integrity of critical infrastructure,” he emphasizes.

Lux Research analysts studied funding of cyberphysical security firms, notably by venture finance firms, and the startup environment.

They found that the United States accounts for nearly half of the IoT security startups, while a third are headquartered in Israel. Together, 77 startups assessed by Lux have raised $808 million since 2000, with many receiving no venture capital funding.

Platforms are a prime focus, with more than half of the companies aiming to provide horizontal security platforms capable of supporting multiple types of IoT devices and environments.

Securing industrial control system networks is a huge initiative across the IoT security landscape while securing the connected car is also a hot spot.

New areas of innovation for cyber-threat countermeasures include device behaviour analysis, network behaviour analysis, and combinations of the two approaches, the focus being on performing authentication and encryption in supervised and untampered IoT environments.

Visit Lux Research at www.luxresearchinc.com

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