Cybersecurity Deals Fall 28% as Investment Climbs to $22.3 Billion

Private equity and venture capital investors are putting more money into cybersecurity even as the number of deals declines, signaling a shift toward larger and more selective bets on companies positioned to benefit from artificial intelligence.

The Details

Global PE and VC investment in cybersecurity reached $22.29 billion in the first half of 2026, up 3.8% from $21.48 billion during the same period last year, according to an analysis from S&P Global Market Intelligence. At the same time, deal volume fell 27.6% to 220 transactions.

The divergence suggests investors are concentrating capital among fewer companies rather than spreading it across a larger number of deals.

The median value of a cybersecurity PE or VC investment stood at $14 million in the first half of 2026, remaining well above the $10 million median recorded in 2024. The median deal size increased 50% in 2025 to $15 million, according to S&P.

Artificial intelligence is helping drive the shift as cybersecurity requirements evolve alongside the technology. Companies with credible AI-powered cyber defense capabilities are attracting greater investor interest as organizations face new vulnerabilities created by increasingly sophisticated AI systems.

The investment environment also reflects growing demand for technologies that can protect identities, networks and sensitive data. Identity and access management (IAM) was one of the biggest areas of cybersecurity investment in 2025.

Capital flowing into IAM companies reached $18.97 billion last year, more than four times the $4.40 billion invested in 2024. The number of transactions also increased, rising to 218 from 197.

That momentum has slowed in 2026. IAM investment totaled $2.95 billion across 73 deals in the first half of the year, suggesting investors may be taking a more cautious approach after the sharp increase in activity in 2025.

Deals and Demand

Some of the largest cybersecurity-related transactions past year illustrate the scale of capital flowing into the sector. HgCapital’s $5.96 billion acquisition of P&I Personal & Informatik AG was the largest deal identified by S&P in 2025. Turn/River Management’s $4.42 billion acquisition of SolarWinds and Francisco Partners’ $2.19 billion purchase of Jamf Holding Corp. also ranked among the year’s largest transactions.

Beyond AI and enterprise security needs, national security concerns are influencing investment decisions. Rising defense budgets, advances in drone warfare and increasingly sophisticated cyberattacks linked to organized crime are creating additional demand for cybersecurity and related technologies.

For investors, the changing environment means companies may need to demonstrate more than growing demand for cybersecurity products. Firms with differentiated technology, credible AI capabilities and a clear role in protecting critical systems could be better positioned to attract the larger pools of private capital.

The first-half figures suggest that while cybersecurity dealmaking has slowed by volume, investors have not pulled back from the sector. Instead, capital is increasingly being concentrated in fewer opportunities that investors believe can deliver stronger returns as cyber threats and AI capabilities continue to evolve.

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