Over the last decade, cyber security has become a predominant issue for many medium to large companies, as well as local and federal government agencies. Most companies and governments rely on the use of digital networks, devices, programs, and data in their everyday operations. As companies and governments increasingly rely on these tools, many cyber criminals have found ways to enter into private networks and systems to monetize or gain knowledge from such security breaches.
With every problem comes an entrepreneur with a solution. Cyber security entrepreneurs are developing security solutions for every access point vulnerable to a cyber criminal attack. Whether such unauthorized access or points of attack are vulnerable through networks, applications, digital infrastructures, cloud systems, mobile devices, or backup systems, sophisticated solutions exists in part due to startups active in this market segment. Most startup companies depend on raising outside capital to fund their product research and development.
According to Atlas VPN, an online privacy and security company, 78 new cyber security startups founded in 2020 have raised $31.6 million in funding year to date. These funds were privately raised through either convertible debt notes or priced equity rounds issued by each startup company to either a Venture Capital firm or an accredited investor. As the cyber security market segment continues to grow and new security issues arise, new startup entrepreneurs will emerge and will need to understand the general differences between raising operating capital through convertible debt notes and priced equity rounds.
Convertible Debt Notes
Priced Equity Round
If you are a cyber security startup and would like additional information related to raising capital for your emerging business, please contact Edward Grattan for assistance.
September 29, 2020
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