Data Breaches Boost Funding for Cybersecurity Startups

July 15, 2015

Before Max Krohn, the OkCupid co-founder, played online matchmaker, he had a far-less-romantic interest in cryptography. But he couldn’t see a way to make a living at it.

“Security startups never really did so well,” says Mr. Krohn, who studied computer science at Harvard University and the Massachusetts Institute of Technology. “There was not an example of a runaway success.”

That is changing, following major data breaches, as corporate customers and venture capitalists show increased interest in cybersecurity. Mr. Krohn and another OkCupid co-founder have a new startup, Keybase, which aims to make encryption easier to use. Wednesday drew its first outside investment, a $10.8 million round led by venture-capital firm Andreessen Horowitz.

On Monday, Google Capital, the search giant’s growth-equity fund, made its first cybersecurity investment, leading a $100 million round in Crowdstrike, known for outing Chinese and Russian hackers. Allegis Capital this month said it closed on $100 million toward a fund focused on cybersecurity. Three years ago, private-equity fund Blackstone Group had no cybersecurity investments; now it has seven.

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