What's Holding Back India's Security Startups? Investors worry whether Indian founders can build cybersecurity products that scale globally, says Srinivas Shekar, Co-Founder of Pantherun Technologies
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Despite being the second most targeted country for cyberattacks in 2024, India's cybersecurity startups continue to lag behind fintech and SaaS in attracting venture capital.
According to estimates, the global cybersecurity market was valued at USD 143.55 billion in 2024 and is projected to reach USD 225.21 billion by 2030, growing at a CAGR of 7.6 per cent. In comparison, India's cybersecurity market stood at USD 9.8 billion in 2024 and is expected to grow to USD 36.8 billion by 2033, according to IMARC Group, exhibiting a CAGR of 15.8 per cent, nearly double the global rate.
Yet, "In India, there are over 1,400 cybersecurity companies, but only 235 are funded, and just 13 have reached Series B," said Prayank Swaroop, Partner at Accel, during a media roundtable at the fund's Cybersecurity Summit.
He believes India has the potential to mirror its SaaS success in the nearly USD 400-billion global cybersecurity market, but only if founders commit to playing the long game.
So, what's stalling the funding momentum?
"One of the reasons is that cybersecurity buying in India is still largely reactive and compliance-driven, not proactive. Demand typically spikes only after enforcement actions, such as those from the RBI," explained Somshubhro (Som) Pal Choudhury, Co-Founder & Partner, Bharat Innovation Fund.
"While exits like PingSafe and Smokescreen are promising, they're still too rare to build broad investor confidence. Moreover, Indian customers often prefer global incumbents or local 'me-too' players offering low-cost, service-heavy solutions. That limits the global scalability of Indian cybersecurity startups," Choudhury added.
Deepak Gupta, General Partner at WEH Venture Partners LLP, attributes the funding gap to structural differences in market readiness.
"In fintech, India has a large domestic TAM (Total Addressable Market) that can be largely served by Indian players, hence the funding boom. On the other hand, SaaS is a broader category than cybersecurity. A decade ago, Indian companies sold software 60 per cent cheaper via telesales, cybersecurity purchases especially in mature markets are complex and not just cost-driven. Enterprises already have around 40 security products in their stack. So yet another point solution may not be compelling...Only countries with deep, specialised expertise like Israel attract significant investment in cybersecurity," he noted.
On a more optimistic note, Srinivas Shekar, Co-Founder of Pantherun Technologies, believes that interest in cybersecurity is growing, but scalability remains a concern.
"Investors worry whether Indian founders can build cybersecurity products that scale globally. There's also a lack of clarity around monetisation models. Mature markets like the US and Europe show much higher adoption, often driven by proactive compliance behaviour and strong data protection laws," he explained.
Despite these challenges, Shekar remains hopeful. "There's growing awareness about cybersecurity's importance, and we're seeing structured interest from more forward-looking Indian companies. The momentum is slowly but surely picking up."
