Investment in UK cybersecurity start-ups skyrocketed to £104m between March 23 and May 18, a 940% increase from the £10m raised during the same eight-week period last year.

The surge in investment, reported by government-backed scale-up programme London Office for Rapid Cybersecurity Advancement (Lorca), comes at a time when the wider UK start-up ecosystem has seen a 50% slump in investment, suggesting that cybersecurity start-ups are benefitting from security concerns caused by the Covid-19 pandemic.

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Lorca found that UK cybersecurity start-ups have already raised £496m ($620m) since the start of 2020, putting them on track to surpass the £521m raised during the whole of 2019, representing a seventh straight year of rapid growth (see chart).

The largest lockdown deal was completed in April, when London-based Privitar raised $80m in a funding round led by Warburg Pincus. Two months earlier, OneTrust raised $210m, making it the UK’s top-funded cybersecurity start-up.

Supply chain needs

While the Covid-19 crisis froze economic activity in many sectors, Lorca found that cybersecurity issues gained prominence as a result of the pandemic, in part as “malicious actors look to exploit vulnerabilities caused by remote working”.

The report also highlights supply chain vulnerabilities, as Covid-19 creates the need for more agile supply chains. The report said that as companies rush to collaborate with new suppliers, “security professionals admitted to Lorca that they’ve skipped doing security checks entirely to fast-track the onboarding process”.

Lorca also highlighted the security risk posed by disinformation, a topic that has seen increased attention this year as coronavirus conspiracy theories have undermined public health efforts.

Furthermore, cybersecurity has become a hot topic this year, with calls to ban Huawei and TikTok highlighting the political dimensions of cybersecurity issues.

A booming sector

The Covid-19 pandemic has accelerated the rapid growth of the cybersecurity sector.

As the cybersecurity landscape matures, successful start-ups are likely to go on to become viable foreign investors in their own right; Privitar looks set to invest heavily on international expansion following its latest round of funding, and OneTrust acquired Seattle-based Integris Software in June.

Privitar ‘de-identifies’ data, allowing companies to analyse sensitive information while protecting the individuals behind it, while OneTrust offers compliance software that helps companies navigate data protection regulations such as the EU’s GDPR.

As the need for such services increases, investment in cybersecurity looks set to continue rising. Data from greenfield investment monitor fDi Markets shows a record-breaking 102 cybersecurity FDI projects worldwide in 2019, following rapid increases every year since 2014, when only 14 projects were announced.