Innovative solutions from startups are a key part of the response to the evolving challenges of cybersecurity. Threats evolve quickly, and the defenders have to move just as fast to counter them. We need to keep the pipeline of cyber innovation flowing globally, with the right products to tackle evolving problems, but what makes a successful cyber startup?
Every year, CyLon receives hundreds of applications to our accelerator programs in London and Singapore. Since CyLon was founded in 2015, we have scrutinized over 1000 early-stage cyber companies spread all over the world - in the last year alone we have had applications to our programs from companies in 52 countries and six continents, including Germany, Latvia, Chile, Egypt, Singapore, Canada and Tanzania.
We have evaluated every team, every product, and have interviewed hundreds of companies in person, with 83 making the grade to join our programs to date. As a result, we have some insight into what works and what doesn’t, not just in security innovation, but in the team dynamics of a successful startup. We believe there are a few key success factors for a cybersecurity startup to consider.
Customers over investors
Our experience shows that a strong team with a good idea will not struggle to find VC money. Indeed, many applicants to CyLon have already raised some external funding, and a high number of our companies raise after the program.
What even well-funded cyber startups generally lack is easy access to customers. CISOs and other budget holders are swamped by vendors and do not have the bandwidth to triage potential new solutions. Finding early adopters is crucial: CyLon has built a network of contacts who understand the changing nature of the threat environment and are more willing to work with early-stage teams to solve problems. They recognize that while working with innovators carries some risk, there is also a risk in not trialing the most up to date solutions.
Balanced team skills are crucial
Another consistent marker is proven sales ability. We have found that the most successful founding teams have a mix of cyber experience and credible commercial expertise. Technical knowledge is necessary but not sufficient: you still have to sell. Teams with exclusively research or academic backgrounds have typically struggled to make the transition, even in a technical space such as cybersecurity.
With age comes beauty: we see most applications from teams with a significant number of years' experience in the sector, rather than fresh graduates. On average fewer than 5% of our applications are from founders with exclusively academic backgrounds, and many applicants list between 15 and 25 years of relevant commercial experience.
Women are still underrepresented: only 17% of our companies have had women in their leadership teams, but the opportunity for them is huge as the security market seeks to better reflect the priorities of all those it serves.
Know the competition
Almost every cyber startup we see thinks they are doing something unique. Few of them are. A startup will always face competition, and the chances are they will need to displace an existing vendor even if they are solving a problem in a new way. Cybersecurity is a crowded and noisy market, so startups need to understand their true differentiators. Proper competitor analysis is a key first step to establishing the product USP.
Solve a real problem
In our experience, too many early-stage cyber startups have not validated customer appetite for their solution. We understand that it is hard to access individual customers for that validation, but there is good research available on where security teams feel underserved and where they want to focus their spend. If a startup can show that it has identified a true market need, it will stand out.
This is part of a blog series provided by CyLon, who find, grow and invest in the world’s best emerging cyber businesses, via its tailored acceleration programs in London and Singapore. Since 2015 CyLon has supported more than 80 companies and has a portfolio of international companies valued at more than £400m. For more information, visit cylonlab.com.