As VC investment booms, AI and cybersecurity startups rake in the big bucks

Dive Brief:

A rough year for cybersecurity translated into heavy venture capital investment in 2017. Cybersecurity startups brought in around $4.2 billion in VC funding — breaking a 2015 high, even with a similar number of deals compared to the previous two years, reports PitchBook. The four largest cybersecurity fundings ranged from $100 million to $180 million, and NEA and Accel were the most active investors with nine deals each.
Artificial intelligence and machine learning companies logged an even bigger year with more than $10.8 billion in VC investment, $1.6 billion of which was raised by Nio, an autonomous vehicle company, according to PitchBook. Facial recognition companies Face++ and Sensetime cumulatively raised almost $900 million.
Overall, VC firms shelled out $84 billion across more than 8,000 companies in 2017, the highest amount of investment since the dot-com boom and bust, according to a PitchBook report. Unicorns garnered a record-breaking 23% of all VC investment with $19 billion overall.

Dive Insight:

The startup climate is changing as the amount of VC financing continues its historic rise.

Only 769 VC-backed companies made an exit in the last year, the lowest number since 2011, according to report. Instead, many startups are receiving the money needed to remain private companies for longer amounts of time, pushing the average time to exit after the first round of funding up to 6.5 years — a 30% increase over the last decade.

The emerging technology world is ripe for the taking with billions of dollars at play. Cybersecurity was the third most active vertical globally in the VC field, coming in behind fintech and SaaS, reports PitchBook.

While a fortunate few reach unicorn status, many startups are gobbled up by enterprise giants with large pocketbooks. Over the last decade, Alphabet and Cisco have each shelled out $3.2 billion on emerging technologies, and last year, Accenture, Symantec and Alphabet completed the most emerging tech acquisitions, according to the report.

But some companies can emerge as unicorns, especially in the technology sphere. Of the 52 members of the "Unicorn class of 2017," more than half were VC-backed IT or technology companies, according to PitchBook.