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Finance and Banking, Government, Specific Industries
European cybersecurity investment platform acts as investor aggregator
Akshaya Asokan (asokan_akshaya) •
October 21, 2022
European Commission and European Investment Bank report says Europe’s cybersecurity industry could be in perpetual second place behind US, Israel and China without new funds to fill investment gap I am warning you.
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Continental leaders are already concerned that Europe is losing its ability to act independently in the information age, calling for “digital sovereignty” to reduce Europe’s dependence on foreign tech firms. is connected to
An additional 1.75 billion euros per year will need to be spent to catch up with US-level investments in cybersecurity start-ups. The funding proposed by the report should come from a new European cybersecurity investment platform overseen by the European Union’s lending arm, the European Investment Bank. .
“Generally speaking, EU cybersecurity firms tend to underperform their international peers,” says the report. “They are few in number, generally underfunded,” and are often acquired by large foreign companies.
Last month, Arizona-based NortonLifeLock acquired Czech company Avast for €7.6 billion (see below). NortonLifeLock and Avast deal completes, creating $3.5 billion consumer titan).
The report attributed Europe’s disappointing performance to a “worst situation”. Unlike US venture capitalists, European investors are risk averse. Unlike Asian governments, European governments do not invest in corporate growth and expansion.
What’s not missing is public capital for early-stage innovation, the report says. However, once the initial seed capital is exhausted and it’s time to raise Series A funding, an investment gap emerges.
Despite that gap, the European cybersecurity industry registered a compound annual growth rate of nearly 40% between 2016 and 2019, simply because the lagging industry is catching up. It may reflect that Venture capital investment in the United States and Israel is significantly larger, reaching about 35 times that of the 27 EU member states in 2019.
Series A, Series B and Series C funding is where the European cybersecurity investment platform comes into play.
Potential sources of funding include InvestEU, an existing fund aiming to launch investments of €372 billion between 2021 and 2027. Much of the funding comes from investors such as commercial banks, private foundations and corporate investors. The report assumes investments ranging from over €250,000 to his €30 million.
One option is for European cybersecurity investment platforms to provide financial and technical assistance, including event training and possibly matchmaking. Alternatively, the Fund may be limited to funding with limited technical assistance provided.
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