Market Overview

SharesPost: Cybersecurity to Grow to $165 Billion Market; Big Tech Will Continue to Acquire VC-Funded Start-Ups

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A record volume of venture capital being invested in cybersecurity firms
has unleashed a wave of innovation that could result in mostly M&A
liquidity events rather than initial public offerings over the next few
years, according to a trio of new cybersecurity reports from SharesPost.

"The cybersecurity industry is growing in complexity and scope to
address the widening array of global threats," said Rohit
Kulkarni
, Managing Director and Head of Research of SharesPost, Inc.
"The upshot is that the cybersecurity market could continue to see
capital flow to fund new companies and innovation. At the same time,
cyber spending could outpace IT spending, creating a $165 billion market
in 2023 from $95 billion today."

Among key findings of the report:

  • More M&A Ahead. Cybersecurity firms such as Zscaler and
    Carbon Black have enjoyed strong IPOs this year, but don't expect
    emerging venture and private equity-backed start-ups to follow that
    example. The most likely exit opportunity for cyber security start-ups
    will be M&A, not an IPO, the report found. The likely acquirers will
    be big tech firms, such as Symantec, Cisco, Microsoft, and Raytheon,
    which have been acquiring cyber start-ups. The sector is also an
    attractive opportunity for private equity investors to roll-up
    best-of-breed solutions. Click to read: Exit
    Scenarios For Cybersecurity Growth Firms: Why Investors are More
    Likely to See Acquisitions than IPOs
  • SharesPost Survey Reveals Cybersecurity Lapses. Despite
    increased awareness of cybersecurity threats, 61% of security
    professionals surveyed reported malware, malicious data breaches,
    hacker activity or other cybersecurity threats over the past 12
    months. This number likely understates the ubiquity of breaches
    because it can't account for undiscovered breaches, and respondents
    are often unwilling to disclose breaches, even anonymously. The
    survey, which received 372 responses from cybersecurity industry
    professionals, also found that more than 90% of those polled are
    planning to increase their spend on cybersecurity software and
    cybersecurity insurance products. Only 5% said they plan to spend less
    over the next year. Click to read: Cybersecurity
    Survey: Industry Professionals Report Rising Threats, Rising Costs
  • New Technology, New Challenges, New Products & Markets.
    Three developments could likely have the most widespread impact on
    cybersecurity in the near-term: Cloud and hybrid security solutions,
    advanced data analytics and Machine Learning. As important,
    cybersecurity is now an issue for entire countries, not just public or
    private companies. Governments around the world are increasingly
    trying to protect consumers, corporations and national security with
    new regulations that will create new demand for cybersecurity
    solutions. Click to read: The
    Third Evolution of Cybersecurity: How Security Threats and Cyber
    Defenses Shifted Over the Years

About SharesPost, Inc.

SharesPost is a FINRA-registered broker-dealer, SEC-registered
Alternative Trading System (ATS) and Registered Investment Advisor.
SharesPost helped launch the secondary market for private tech companies
in 2009 and has built one of the leading platforms for secondary
transactions and digital securities. SharesPost provides the private
tech asset class with a suite of trading and lending solutions to
facilitate shareholder and option holder liquidity. With more than $4
billion in secondary market transactions in the shares of more than 200
leading technology companies, SharesPost provides the trading, research
and online tools to transact in the private market with confidence. For
more information, visit sharespost.com.

Cautionary Note Regarding Forward-Looking Statements

The matters described herein contain forward-looking statements. These
statements include, but are not limited to, statements about research on
late-stage, venture-backed companies. We caution that these statements
are not guarantees of future performance. Actual results may differ
materially from those expressed or implied in the forward-looking
statements. Forward-looking statements involve a number of risks,
uncertainties or other factors beyond SharesPost's control. These
factors include, but are not limited to, factors detailed in the white
paper. We undertake no obligation to release any revisions to any
forward-looking statements.

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