Cybersecurity 2.0 – From Combating Viruses to Protecting Lives

On 4th August 2022 at 07:00 hours, Advanced, a UK company providing digital services, was alerted to a cyber-attack on their systems. One might easily discard this as just another example of a cyber-related crime that appears to have become an everyday occurrence in our increasingly connected and digitized world. However, the actual target of the attack was one of Advanced’s clients, the UK’s National Health Service (NHS). Its system is used to dispatch ambulances, book out-of-hours appointments, and issue emergency prescriptions.

Cyber-attacks often impact clients and suppliers, ultimately putting a firm’s survival at stake

Aside from the chaos inflicted on the NHS – which severely affected response times across the UK and could take up to four weeks to resolve – the implications of this attack resonate much wider: Advanced’s other clients (among them London City Airport, the UK Department for Work and Pensions, Westinghouse, and several universities) are now scrambling to determine their risk exposure and vulnerability.

Why both entrepreneurs and investors should care

Advanced’s example embodies the complexity of challenges the cybersecurity industry is trying to address: Safeguarding the whole value chain within an industry or segment, down to the smallest integrated supplier. It also proves those wrong who argue that only big and powerful organizations are hit and that small to medium-sized companies are too insignificant to be targeted. As we move into the era of self-driving cars and home appliances talking to each other (a.k.a the internet of things), cyber breaches could have immediate and severe implications for our lives and those dearest to us. Consequently, it has become increasingly critical to address the weaknesses of new technologies. Every piece of connected hardware is a new entry point that needs to be protected.

Risks will increase – how about the opportunities?

In Stableton’s home market Switzerland, 61% of executives expect a surge in reportable ransomware incidents in 2022. At the same time, only 40% admit to thoroughly understanding their third-party cyber and privacy risks[i]. In this context, our article aims to highlight the evolution of the cybersecurity market and identify factors that have led to its extraordinary growth. Finally, we close by portraying one of its protagonists that appears to “get it right” regarding product design and market development.

The rise of cybersecurity – from getting a virus scanner on every PC to complex cloud-based security solutions

In the 1970s, programmer Bob Thomas created software known as Creeper, widely regarded as the first computer trojan. In response, Ray Tomlinson (incidentally also the inventor of email) authored the Reaper software that pursued and eliminated Creepers – Reaper was the very first anti-malware application. Cybersecurity took off in the 1980s as many of today’s best-known antivirus software companies, including Norton and Avast, emerged. In recent years, cyberattacks and security breaches have increased in both volume and severity. For example, from 2020 to the end of 2021, the global volume of weekly cyberattacks per company climbed by around 85%, while ransomware payments were projected to increase by 183.7% over the total amount paid in 2020. The IBM Marketplace survey indicated that 62% of companies consider cybersecurity the most crucial component when building their IT infrastructure. And accordingly, investment in cybersecurity has risen sharply.

Sometimes, the sheer size of these figures clouds the actual impact on a single firm or industry. However, looking at it from the perspective of the cost of a single data breach immediately drives home the severity of both the problem and the business opportunity resulting from it. Particularly our Swiss readers will not fail to notice that, aside from Energy, traditional Swiss industries such as Healthcare, Financials and Pharma head that list.

A USD 50 billion cloud-based cybersecurity market emerges

Cloud-based cybersecurity (security, IT management, resilience) is the collection of technologies, protocols, and best practices that safeguard cloud computing environments, cloud-based applications, and cloud-based data. This USD 50 billion market is one of the fastest-growing IT verticals in the world – according to Morgan Stanley, end-user spending on cloud-based security software climbed faster than digital transformation, artificial intelligence (AI) and machine learning (ML), customer relationship management (CRM), and data analytics.

2021 produced 30 unicorns in the segment, but are they dealing with the core problem?

A new generation of companies has emerged to address today’s cybersecurity landscape’s latest threats and challenges. According to CB Insights, the number of cybersecurity unicorns topped 30 in 2021, and intense deal activity is observed in the field.

As businesses rely on various digital channels nowadays, security is essential on multiple levels. Consequently, many describe an efficiency issue in cybersecurity – Lack of interoperability, automation, and product coverage as typical across security providers. Those who can integrate all these aspects efficiently gain an edge over their competitors. One of the industry players that appears to master this requirement of combining cyber protection with data backup, disaster recovery and associated services is Acronis. It has been named a visionary for several years in a row by Gartner, the renowned global technology-focused research and consulting firm that published the famed Magic Quadrant as part of its annual Gartner Report.

Acronis, one of the leaders in Cybersecurity 2.0

Founded in 2003 and headquartered in Switzerland, U.S., and Singapore, Acronis is a cybersecurity company that solves safety, accessibility, privacy, authenticity, and security challenges by offering efficient and secure backup, security, disaster recovery, enterprise file sync, and shared solutions built for hybrid cloud environments. Acronis is uniquely positioned to take advantage of the USD 50b+ cybersecurity space, thanks to an all-in-one cloud-based platform, awarded “visionary product” by Gartner in 2021. The cloud-based cybersecurity market is one of the fastest-growing and most recession-proof IT verticals, with an expected CAGR of ca. 32% between 2020-2025. The company primarily targets small to medium-sized business (SMB) customers, a segment that has been historically overlooked by most of its competitors. Thanks to a very effective B2B2B go-to-market and business model, which required more time and effort to implement than a conventional approach, Acronis has been able to generate a strong customer network effect that produces an important defensive moat. This approach, coupled with a highly effective sales network, has enabled Acronis to increase customer growth and stickiness. In addition, the company has developed a significant number of Application Programming Interface (API) connectors, allowing them to be highly flexible to clients’ needs and specificities. Today, Acronis serves customers in more than 150 countries.

Contact Stableton Or Sign Up To Explore Our Investment Opportunities

In the past, accessing opportunities created by those disrupting the cybersecurity industry meant seeking early access through venture capital funds (which, once well-established, might not even be interested in your commitment). In addition, it involved high investment minimums, cumbersome paperwork, scarce information (often not even knowing what you will be investing in), and long holding periods. Today, there is an alternative. Stableton is Switzerland’s leading provider of access to late-stage venture capital & pre-IPO Investments to smaller qualified investors. Our mission is to help investors get access to the otherwise secluded private investment market. With a minimum of CHF 10’000, this type of investing should be considered as part of a portfolio. If you are allocating in a professional capacity, please get in touch with us to learn about investment solutions for institutional clients. They are our answer to challenges we have faced as professional investors ourselves, as we source, negotiate and allocate on behalf of our clients. This article only scratches the surface of the opportunities late-stage VC and pre-IPO investing present. Contact your Stableton representative now to learn more and find out about opportunities that exist right now.

[i] https://www.pwc.ch/en/services/consulting/cybersecurity/incident-response-and-recovery.html