AI is repricing cyber in both directions. It's compressing legacy SaaS multiples and displacing point solutions, while simultaneously creating entirely new attack surfaces that demand more security spend. Public markets reflect this: cyber is up 33% YTD, outperforming the S&P 500 by ~2,400 bps, and valuations are bifurcating sharply at the top of the market – the leading platforms (Cloudflare, CrowdStrike, Palo Alto) now trade above 20x revenue, a premium for profitable growth that the rest of the sector, including several household names trading at 6–7x, isn't capturing.
The capital story in cyber has bifurcated by vintage. Fresh capital is rotating sharply into early-stage, AI-native companies – nearly half of H1 funding went to seed and Series A – while the record sums invested at peak 2021–22 valuations sit increasingly stranded. Those companies were struggling to grow into their entry prices even before AI began repricing the SaaS model; now, with zero cyber IPOs in H1 and 90 unicorns still private, an enormous amount of invested capital lacks an attractive exit. For profitable, capital-efficient, and growing companies – the scarce commodity in this market – that dynamic is an argument for engaging sooner rather than later.
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