Researchers from Switzerland’s Cyber-Defence Campus have recently conducted a comprehensive study on investment performance in information security startups, with blockchain emerging as the top performer. The study, titled “Measuring the performance of investments in information security startups: An empirical analysis by cybersecurity sectors using Crunchbase data,” analyzed and ranked 19 sectors within the information security startup landscape, ranging from artificial intelligence to spam filtering.
According to the findings, investments in blockchain security startups outperformed other sectors such as artificial intelligence, machine learning, and cloud by a significant margin. In fact, blockchain recorded the highest returns, with expected annualized arithmetic returns of 67.25%. It’s important to note that these figures do not encompass the broader AI and tech sectors, which include non-security hardware and software products and services.
When focusing solely on security sector investments, blockchain not only topped the list in terms of returns but also displayed the fastest growth. On average, blockchain startups transitioned from their first recorded funding round to their initial public offering (IPO) in less than three and a half years. In contrast, startups in other sectors took between four and seven years, with e-signature startups requiring ten years.
To conduct the study, the researchers utilized Crunchbase data, which provided comprehensive information on funding rounds. However, there were some gaps in the data regarding IPOs. To address this issue, the researchers employed a machine learning approach to compensate for the missing information.
The research team also noted that the performance of blockchain security startups is likely influenced by investors’ interest in cryptocurrencies. Consequently, it should be mentioned that the data used in the study only covered the period from 2010 to 2022, omitting much of the post-COVID activity that has been deemed transformative for both blockchain and crypto by other studies.