Venture Capital's Cybersecurity Crisis: No Money, No Innovation, No Future?
Why venture capitalists have abandoned cybersecurity and what this means for real innovation
Welcome to Razorwire, the podcast where we go beyond the headlines to dig into what really matters in information security. I'm your host, James Rees and this week we're pulling back the curtain on the world of venture capital in cybersecurity. The brutal truth is that VC money has dried up, innovation has stalled and according to this week’s special guest, we're mostly seeing "the same crap with AI on it." VCs are having layoffs, funds are frozen at 13-14 years with no exits and genuine breakthroughs are nowhere to be found.
In this episode, I sit down with cybersecurity expert Oliver Rochford to dissect the state of VC investment in information security in 2025. We break down why funding is tightening, where the "innovation" is really happening (or not) and how security start-ups can survive in a changing landscape. If you're tired of jargon and want to know what's really happening behind the scenes, from market consolidation through to the real world impact on practitioners and products, this one's for you.
3 key talking points you won’t want to miss:
- Why VC money is slowing and what that means for innovation
- We explore the shifting strategies of venture capital in the security industry: what’s drying up, where the smart bets are moving and whether this environment is strangling real progress.
- The reality behind “consolidation” and the myth of the mega-vendor
- Oliver unpicks the idea of market consolidation and explains why, despite the headlines, the security market remains fragmented and why there’s unlikely to be a handful of companies owning it all.
- What start-ups really need to survive in the current market
- We talk through the pitfalls, survival tactics and realities facing new security vendors. From the importance of business fundamentals to why flashy tech might not be enough, you’ll get practical insight into turning great ideas into sustainable businesses.
Tune in for a realistic look at the business side of cybersecurity, packed with lessons directly from the experts.
The Startup Funding Struggle:
"No one's getting any money. Not the investors, not the VCs. They've had rounds of layoffs in the VC industry, which you can imagine, the people with money have had layoffs."
Oliver Rochford
Listen to this episode on your favourite podcasting platform: https://razorwire.captivate.fm/listen
In this episode, you’ll learn:
Why VC Funding Has Hit Crisis Point: Discover why venture capital investment has frozen in cybersecurity, with VC funds now at 13-14 years (well beyond the typical 10-year lifecycle) and no viable exits in sight and why even VCs themselves are having layoffs.
How Major Vendors Are Replacing Traditional VCs: Learn why Cisco, Okta and Zscaler have established their own investment arms and how this shift is concentrating power whilst reducing diversity in startup selection.
What's Really Happening Behind the Scenes: Understand how silent fire sales are occurring and why limited partners are refusing to invest further, stalling new cybersecurity ventures.
Why "Consolidation" Is Actually a Myth: Learn why the cybersecurity vendor landscape remains highly fragmented despite headlines suggesting otherwise and why no single vendor will ever dominate.
How Cybersecurity Compares to Other Tech Markets: Discover why the total addressable market for cybersecurity ($78 billion) pales next to what Microsoft alone spent on AI data centres ($85 billion), making it less appealing for VCs.
Which Niches Are Still Getting Funding: Find out why only security telemetry pipelines, AISecOps, cloud security and machine identities are attracting investment whilst most areas see nothing.
Why European Startups Face Impossible Odds: Understand the "stunted trees on a mountain" reality, where European startups get 10% of American budgets but are expected to deliver the same results.
What Happens to "Autonomous" Security Promises: Learn why most companies promising fully automated pen testing or autonomous security operations inevitably pivot to AI-assisted managed services.
How AI Is Breaking Traditional Metrics: Discover why customers jump between AI tools monthly rather than committing annually, making traditional revenue metrics unreliable and forcing new approaches.
What Startups Must Do to Survive Now: Understand why rapid traction and clear revenue paths are now essential for securing follow-on investments in this tougher environment.
Why Innovation Has Actually Stalled: Learn why there's been no real innovation in cybersecurity for five years, with most products being iterations rather than genuine breakthroughs.
How Market Barriers Have Grown Higher: Discover why larger vendors with established customer bases and investment arms now dominate, making it nearly impossible for new startups to break through.
Why Networks Matter More Than Ever: Understand how increasing emphasis on backgrounds and connections is creating fewer opportunities for diverse or unconventional teams to succeed.
Resources Mentioned
- Infosec
- Gartner
- Wiz
- Razor's Edge Continuous Threat Exposure Management
- Y Combinator
- The Cyber Sentinels Handbook
Connect with your host James Rees
Hello, I am James Rees, the host of the Razorwire podcast. This podcast brings you insights from leading cybersecurity professionals who dedicate their careers to making a hacker’s life that much more difficult.
Our guests bring you experience and expertise from a range of disciplines and from different career stages. We give you various viewpoints for improving your cyber security – from seasoned professionals with years of experience, triumphs and lessons learned under their belt, to those in relatively early stages of their careers offering fresh eyes and new insights.
With new episodes every other Wednesday, Razorwire is a podcast for cyber security enthusiasts and professionals providing insights, news and fresh ideas on protecting your organisation from hackers.
For more information about us or if you have any questions you would like us to discuss email podcast@razorthorn.com.
If you need consultation, visit www.razorthorn.com, We give our clients a personalised, integrated approach to information security, driven by our belief in quality and discretion.
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