Crunchbase: Venture capital investment in AI cybersecurity industry to exceed $2.6 billion in 2024

Recently, AI data security startup Cyera completed a $300 million Series D round led by Accel and Sapphire Ventures. The deal makes Cyera the largest financing for a startup at the intersection of two of venture capitalists’ favorite industries: artificial intelligence and cybersecurity.

In April this year, Cyera's Series C financing also reached US$300 million.

While Cyera’s two funding rounds may be the largest, the company is far from the only cybersecurity startup using artificial intelligence to nab big bucks.

So far this year, venture-backed AI cybersecurity startups have raised more than $2.6 billion, according to Crunchbase data. That’s nearly three times the total raised by such startups last year, more than $900 million, with nearly the same number of deals.

In the fourth quarter of last year, AI cybersecurity startups received just $121 million across 28 deals.

The rise of artificial intelligence

While many venture capitalists in the web industry are preaching patience to see how AI can be most effectively used in the industry, their willingness to open their checkbooks appears to tell a different story.

Investors appear intrigued by the possibility that startups can use AI to protect the digital world — in areas such as data protection, identity and third-party risk — or even help secure the development of large language models themselves.

Artificial intelligence helps get cash

AI funding has been a big exception to the slowdown in the venture capital market, but cyber — as well as other sectors such as health care and defense — has also shown that investor interest in AI has boosted funding prospects in some other industries.

The introduction of AI into cybersecurity isn’t shocking, as the industry has always been open to early adoption of the latest technology. In the past, cybersecurity has rapidly increased automation and machine learning technologies — likely to help address worker shortages in the industry.

The same could happen with artificial intelligence, although investors are increasingly skeptical of startups’ claims about AI and how to monetize it.