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>> With all the cyber attacks happening around the world to all sorts of companies, you'd think that cybersecurity would be a hot space to invest in, but it's not. I'm Liana Baker with Reuters in New York. Cybersecurity is such a cutting edge, fast moving space that by the time a lot of these private startups come out with their technology, it's already obsolete and hackers have figured out how to infiltrate that technology.
That's one reason why it's hard for these companies that are hot when they raise money to successfully sustain that momentum for several years. Another reason is that big corporations are trying to cut down on the amount of security vendors that they use. They'd rather just use a big provider like Symantec or IBM that provides a whole bunch of services, rather than spread their business around to all these new startups coming out with technology.
Microsoft, Cisco, and Symantec have been good at catching up, coming out with their own versions of very similar technology even within a few years. This has crowded out a lot of these smaller upstarts that while they have a lot of VC funding, they found it very hard to sustain their valuations over time.
This provides little windfall for investors. The poster child for this phenomenon is Carbon Black. The company based outside of Boston was founded over 10 years ago by elite government security researchers, and it's been unable to go public. They hired bankers in 2016, they filed confidentially for an IPO, and they even explored a sale to IBM, sources tell me.
But so far, it's been unable to go public, and it's stranded it's main venture capital investors. And there's many more companies like it. About 300 cybersecurity companies are founded every year, and there's about 2,500 companies already out there. One expert I spoke to compared these companies to cockroaches.
They're not gonna die, but they're not smoking hot either.