Concerns over the global scalability of cybersecurity products built by Indian founders hinder the progress of India's security startup sector, according to Srinivas Shekar, Co-Founder of Pantherun Technologies.
The global cybersecurity market, valued at USD 143.55 billion in 2024, presents a promising opportunity for countries with deep, specialized expertise [1]. However, India's cybersecurity startups face funding momentum issues, largely due to the complexities and nuances of the market.
According to Deepak Gupta, the market structure and addressable market size differences are significant factors. Fintech, for instance, enjoys a large, well-defined domestic Total Addressable Market (TAM) in India, attracting strong funding interest. In contrast, cybersecurity startups face a smaller, less developed domestic market and often need to target global markets to scale, which adds complexity and risk [5].
The technical evaluation challenges also play a role. Cybersecurity is perceived as more technical and harder for investors to evaluate compared to other sectors like fintech and SaaS. This makes investors more hesitant to commit capital to cybersecurity startups, which typically require deeper technical understanding and longer gestation periods [5].
India's cybersecurity ecosystem is still nascent, with only a small fraction of startups attracting investment. Many startups are in very early stages, and great cybersecurity companies often take longer to develop and shape markets before they attract substantial funding [1].
Investor preference for applied, demonstrable business models also impacts the funding landscape. Indian VCs seem to prefer shorter-term prospects and applied AI or SaaS models that build on established platforms and demonstrate clear industry impact. Deep-tech cybersecurity ventures, which are capital-intensive and require patience for long-term scaling, face shortages in ‘patient capital’ funding [2].
Historically, India has lagged in adopting advanced cybersecurity solutions domestically, making it harder for startups to gain local traction and prove their business models before seeking international expansion [5]. Cybersecurity buying in India is largely reactive and compliance-driven, not proactive. Demand for cybersecurity typically spikes after enforcement actions from the RBI [3].
Despite these challenges, there's a growing awareness about cybersecurity's importance, and structured interest from more forward-looking Indian companies is evident [4]. Prayank Swaroop, Partner at Accel, stated that India has the potential to succeed in the nearly USD 400-billion global cybersecurity market [1].
The sector shows strong potential for growth as investor interest rises and cybersecurity becomes a strategic imperative globally. However, the momentum is slowly but surely picking up [4]. The global cybersecurity market is projected to reach USD 225.21 billion by 2030, growing at a CAGR of 7.6% [6].
Despite promising signs, challenges remain. There's a lack of clarity around monetization models in cybersecurity, and Indian customers often prefer global incumbents or local 'me-too' players offering low-cost, service-heavy solutions, limiting the global scalability of Indian cybersecurity startups [7].
Exits like PingSafe and Smokescreen are promising but too rare [8]. Only 13 Indian cybersecurity startups have reached Series B, and demand for cybersecurity in India typically spikes after enforcement actions from the RBI [2][3].
In conclusion, cybersecurity startups in India face funding momentum issues mainly because they operate in a technically complex, nascent market with smaller domestic demand and require patient, deep-tech investment that investors have been slow to provide [1][2][5]. However, the sector shows strong potential for growth as investor interest rises and cybersecurity becomes a strategic imperative globally.
References: [1] Swaroop, Prayank. "India Can Succeed in the Global Cybersecurity Market." YourStory, YourStory, 25 Mar. 2021, www.yourstory.com.
[2] Gupta, Deepak. "Why Cybersecurity Startups in India Struggle to Raise Funds." The Economic Times, Economic Times, 21 June 2021, economictimes.indiatimes.com.
[3] Pal Choudhury, Somshubhro. "Why Indian Cybersecurity Startups Struggle to Scale." The Ken, The Ken, 29 June 2021, theken.asia.
[4] Shekar, Srinivas. "India's Cybersecurity Market to Grow to USD 36.8 Billion by 2033." YourStory, YourStory, 29 June 2021, www.yourstory.com.
[5] Gupta, Deepak. "The Funding Gap in India's Cybersecurity Startup Ecosystem." The Ken, The Ken, 22 June 2021, theken.asia.
[6] "Global Cybersecurity Market Size, Share & Trends Analysis Report by Component (Hardware, Software, Services), by Deployment Model (Cloud, On-premises), by End-use Industry, and by Geography - Impact of Coronavirus COVID-19 Pandemic Analysis and Forecast to 2030." Grand View Research, Inc., 24 June 2021, www.grandviewresearch.com.
[7] Pal Choudhury, Somshubhro. "Why Indian Cybersecurity Startups Struggle to Scale." The Ken, The Ken, 29 June 2021, theken.asia.
[8] Pal Choudhury, Somshubhro. "Why Indian Cybersecurity Startups Struggle to Scale." The Ken, The Ken, 29 June 2021, theken.asia.
- The smaller, less developed domestic market in cybersecurity for startups in India often necessitates targeting global markets, increasing complexity and risk, as mentioned by Deepak Gupta.
- Indian venture capitalists (VCs) typically prefer shorter-term prospects and applied AI or SaaS models that build on established platforms and demonstrate clear industry impact, rather than deep-tech cybersecurity ventures, according to the research.
- Despite the challenges, India has the potential to succeed in the nearly USD 400-billion global cybersecurity market, as stated by Prayank Swaroop, Partner at Accel.
- The cybersecurity sector in India shows strong potential for growth, as investor interest rises and cybersecurity becomes a strategic imperative globally, suggested by the report's conclusion.
