The European cybersecurity industry comprises businesses that provide technology and services to detect and prevent cyberattacks (e.g. malware, phishing, distributed denial of service (DDoS) attacks) against clients’ IT systems. This research covers the entire cybersecurity value chain, which we segment into software development, advisory & testing, managed services and distribution.

The cybersecurity market faces ever-increasing demand on the back of business digitalisation, ever-increasing volume and sophistication of cyberattacks, increasing IT complexity and stringent data protection regulations. At the same time, the market remains fairly fragmented across each of the identified segments, due to a steady inflow of new and well-funded market entrants. Executives interviewed by Gain.pro list generalist IT giants and telecom operators among the main consolidators, integrating cybersecurity into their core offering.

Investor-led activity has been significant across Europe. The main drivers for this include the industry’s favourable growth outlook, recurring revenue streams and its mission-critical nature, resulting in highly resilient demand. Besides typical VC and growth investments, the most common strategies for financial sponsors entail a buy-and-build strategy to expand the offering and geographic footprint as well as the technical expertise of platform investments.

With regards to ESG, cybersecurity businesses play a crucial role in shielding individuals, businesses and governments from harmful attacks. As damages from cybercrime will grow at a CAGR of ~13% until 2025, these businesses play a vital role in containing the damage to society. On the social front, ESG leaders focus on security awareness of their clients, as well as the broader public, as the clear majority of cyberincidents can be traced back to human error.