Digitization and a large-scale transition to remote work are driving investments in the Indian cybersecurity industry.
By Michael Megarit.
The Phenomenal Growth Of The Indian Cybersecurity Industry
India is digitizing at a phenomenal pace.
A report released by RedSeer reveals that the country’s consumer digital economy, valued at $85-90 billion in 2020, is expected to grow tenfold to $800 billion by 2030.
As digitization accelerates, Indian businesses and organizations are collecting and storing vast amounts of sensitive data every single day.
In today’s interconnected world, sharing information is easy.
As a result, an increasing number of businesses realize that cybersecurity, the practice of protecting computer information systems, hardware, network, and data from cyber attacks, is a pressing issue.
In India, this situation has given rise to a vibrant cybersecurity industry – and investors are catching on.
The Global Cybersecurity Market is Growing Rapidly
While cybersecurity has been in demand for nearly a decade, the COVID pandemic has accelerated the urgency to implement effective safeguards.
The rise and normalization of remote work requires virtually all governments and corporations to build robust IT infrastructure to protect their data.
Naturally, a lot of companies are working to provide solutions to this problem.
As a result, the global cybersecurity market is booming and expected to grow to $345.4 billion by 2026.
In parallel, Momentum Cyber’s data reveals that $11.5 billion in total venture capital financing went into cybersecurity startups in the first half of 2021, up from $4.7 billion during the same period last year.
Given its status as a technological hub, India is well positioned to capitalize on this investment trend.
India’s Digitization Requires Cybersecurity
Over the past 10 years, India’s internet usage has exploded.
In 2010, the country had less than 100 million active internet users.
Today, that figure exceeds 600 million, and the country is expected to have 900 million active users by 2025, registering a growth of roughly 45% yearly.
Thus, individuals and businesses are starting to consume large volumes of digital data.
Consequently, they are the targets of malicious attacks.
In 2021 alone, several major Indian companies suffered massive data breaches:
- January 2021: Rajaharia’s data breach saw 35 million Indian cardholders’ information put up for sale on the dark web.
- February 2021: MobiKwik’s data breach saw 110 million cardholders’ information leaked from a company server and sold on the dark web.
- April 2021: Domino’s Pizza India’s servers were hacked and data for 180 million orders, 1 million credit cards and 250 employees was leaked.
- May 2021: Air India’s database was hacked and 4.5 million records were leaked.
These incidences occur on a weekly basis and prove that cybersecurity is indeed a crucial aspect of the country’s technological sector.
The Growth of the Indian Cybersecurity Industry
As digitization increases, so does the need for cybersecurity.
In this regard, India is an untapped market with plenty of promise.
While the nation’s internet economy is young, India has a lot of technological know-how and expertise.
It’s thus no surprise that in just five years, the number of cybersecurity startups has increased nearly tenfold.
Naturally, this phenomenal growth is attracting both national and international investors.
The Indian Cybersecurity Industry Is Attracting National and International Industry
In 2019, six Indian venture capital firms bet big on Indian cybersecurity startups:
- Endiya Partners invested in Shieldsquare, a company that helps online businesses differentiate humans from bots.
- Helix Investments invested $4.47 million in Network Intelligence, a cybersecurity services company.
- IndiaNivesh helped Big Data analytics and Cybersecurity company Innefy Labs raise $2 million in funding.
- IvyCap Ventures invested in Aujas Networks, a company that offers risk management, data protection and identity & access management solutions to corporations.
- JC2 Ventures invested $5 million in Lucideus Technologies, a digital security services company.
- Rajasthan Venture Capital Fund invested in Aujas Networks, a Cloud and Data security provider.
However, Indian investors are not alone in wanting to participate in the cybersecurity boom.
Of the 128 Indian cybersecurity startups, 22% received funding from US investors and venture capitalists.
In 2020, Indian cybersecurity startups raised $35 million across six deals.
Of these six deals, several included US and European firms:
- Securden, a US-Indian on-premise, self-hosted password management company, raised $1.2 million in a seed investment round led by Accel.
- Cyfirma, a cybersecurity startup backed by Goldman Sachs and Zodius Capital raised an undisclosed amount from Swiss investment firm Z3 Capital.
- CloudKnox, a leader in cloud infrastructure entitlement management was acquired by Microsoft in July 2021.
Foreign investors know that India is a high-growth market with tremendous potential.
Thus, it’s no wonder that they are keen to enter the cybersecurity market.
Further, India has plenty to offer international investors.
A Vast Talent Pool and Competitive Pricing
In addition to its growing internet economy, India also boasts an educated, English-speaking workforce and attractive cost competitiveness.
With a total workforce of 500 million people, the majority of whom speak English, India is the perfect market for American and European investors to do business. Further, the US and India have a rich history of economic cooperation. Since US and EU companies have been present in India for decades, it is easy for them to invest and create synergies with local companies.
Traditionally, India was considered a cost sensitive market. Obviously, this is still the case, but now the focus is on qualitative growth, innovation, and product differentiation. Since Indian software developers played a significant role in developing some of the world’s leading software, they are well positioned to understand and protect those same systems.
Increasing Government Support
Lastly, the Indian Cybersecurity Industry is benefiting from continued government support;
Over the past decade, the Indian government actively promoting India as one of the world’s most attractive investment destinations. The “Make in India” policy has stimulated entrepreneurship and attracted billions in Foreign Direct Investments (FDI). In 2020, FDI inflows reached an all-time high of $64 billion, compared to $51 billion in 2019.
The government it is also promoting the growth of cybersecurity startups specifically and providing funds to develop cybersecurity infrastructure. This year, the Indian government is increasing the funds allocated for cybersecurity projects by 66%.
All of these factors contribute to making India’s cybersecurity industry one of the fastest growing in the world.
About the Author
Michael Megarit is a partner with Cebron Group.
With over 25 years of domestic and international corporate finance experience,
he provides M&A and capital advisory to high-growth technology companies.