Investment Trends With…

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Mr. Rick Juarez

Managing Director, Corporate Finance

Imperial Capital, LLC


We are pleased to present our new Cybersecurity industry report, “CyberTiles: Securing Information Pathways”.  Our inaugural edition focuses on our market thesis, the size of important market segments, key industry themes and market participants, and important valuation metrics.

CyberTiles is a graphical representation of our thesis for the Cybersecurity market.  We believe that information will increasingly travel along dynamic and user driven paths.  Historically, IT departments controlled information access. Specifically, this involves the devices used and the paths that users are  allowed to travel.  The considerable growth of the Internet and smart devices has ushered in the era of BYOD (Bring Your Own Device) and seemingly endless ways to access both productive and destructive content.

As shown in Figure 1 below, our CyberTiles graphic depicts how users and their devices travel across many tiles that in an “ideal” world would work together to provide a secure and safe environment. Unfortunately, no single solution exists today that can provide end-to-end security.  End users must build their own solutions that best meet the needs of their users and the paths that their information travels.

Figure 1: Imperial Capital’s Cybersecurity Thesis – “CyberTiles”

Source: Imperial Capital, LLC.

We have highlighted select tiles that comprise key security market segments.  We believe and anticipate that there will likely benew tiles added to address unforeseen threats.  We also see great opportunity for the merging of select tiles into more user friendly and more tightly integrated and secure tiles / solutions. We intend to provide periodic updates as events occur.  

Cybersecurity is vitally important element of cloud infrastructure.  Global spending on cloud infrastructure is estimated by Forbes and Statista to grow from $50 billion in 2016 to more than $228 billion by 2026.  Cloud infrastructure is a broad term that includes IaaS (Infrastructure as a Service), PaaS (Platform as a Service), and SaaS (Software as a Service). Various solution providers can provide security, but securing content is the ultimate responsibility of end users.  

Given the complexity of deploying cloud solutions and the challenges around doing so securely, it is not surprising that a number of end users are turning to third parties for support.  By 2018, the demand for Managed Services will grow to more than $256 billion, according to estimates by Forbes and Statista. We believe that Managed Security Services will be in high demand. 

The need for greater security and advances in technology will likely drive the demand for more specialized “XaaS” type services.  We expect to see stronger demand for existing and emerging XaaS services such as Video as a Service, Identity as a Service, Access Management as a Service, etc.
As Verizon pointed out in its Data Breach Investigations Report in April 2016, approximately 89% of breaches had a financial or espionage based motive. As businesses and end users transition to cloud based solutions, security challenges must be properly addressed and mitigated.  If the security concerns remain unanswered, the cloud projections outlined above will likely be at risk. 

However, we believe there are great profit opportunities for existing and emerging security solution providers.  We expect that new and or improved security solutions will be developed to take advantage of these opportunities. 

For the complete Industry Report, please click here.