Government claims UK cybersecurity sector is surging

Government figures suggest the UK cybersecurity sector is thriving, employing more than 43,000 individuals and estimated to be worth £8.3 billion.

With new regulations forcing companies to invest more in cybersecurity and consumers becoming increasingly aware of the dangers of the digital society, the conditions are right for the sector to thrive. As this is an area which has largely been ignored to date, this is an open opportunity for the aggressive to capture, and it seems the UK has been very successful in doing so.

“It’s great to see our cyber security sector going from strength to strength. It plays a vital role in protecting the country’s thriving digital economy and keeping people safe online,” said Digital Minister Matt Warman.

“We are committed to seeing it grow and are investing £1.9bn over five years through our National Cyber Security Strategy to make sure we lead the way in cyber innovation, develop and attract the best talent.”

Annual revenues for the sector are estimated to have grown 46% over the last two years to £8.3 billion, with the number of cybersecurity firms increasing by 44% to more than 1,200 at the end of 2019. The total number of full-time employees, 43%, has increased by 37% during the same period, with revenue-per-employee reaching an average of £193,500 a year.

Looking at the industry, demand for cybersecurity services is certainly on the rise. A recent report from IDC suggests worldwide spending on security-related hardware, software, and services will be $106.6 billion in 2019, an increase of 10.7% year-on-year. Managed security services, integration services, consulting services, and IT education and training, will see some of the biggest growth, though software, such as identity and digital trust products or security analytics, will also see a significant surge.

With new regulations threatening some very steep fines, GDPR punishments could be as much as €20 million or 3% of global revenues, attitudes are changing as wallets become threatened. For those who are aggressive and innovative enough, there are certainly profits to be made.

One question which some might ask is why the cybersecurity sector is thriving in the UK? There will of course be numerous contributing reasons, but a simple answer might be that the UK is an excellent incubator for start-ups and SMEs.

The UK is often cited as one of the most attractive nations for start-ups in Europe, but also worldwide. Various factors contribute to this image, such as access to a good workforce (both experienced and graduates), excellent transport links, the 6th largest economy in the world, good communications infrastructure and a thriving professional services industry. But in London, businesses have access to one of the worlds most prominent financial centres.

Roughly 30% of Europe’s venture capitalists are based in the UK, accounting for a significant amount of investment funds across the bloc. According to PitchBook, the UK and Ireland accounted for 44.4% of total European fundraising volume through to the end of the third quarter. This accessibility to cash is critical in the early days of a business.

The cybersecurity sector is one which is primed for disruption and start-ups could well find themselves scaling very quickly. Not only is there more regulatory pressure, such as GDPR, to enhance security, but the consumer is becoming increasingly aware of the risks posed by the digital economy. It might not be mainstream yet, but digital security might be factored into buying decisions in the future; businesses will have to invest in this underappreciated sector before too long.

Softbank turns its attention to Latin American start-ups

Softbank has announced the launch of yet another investment fund, this time turning its eyes towards the unfulfilled promise of Latin America.

Alongside the fund, the SoftBank Latin America Local Hub will also be created, an operating group which will help companies in the other Softbank portfolios enter Latin America, navigate the local markets and broaden their geographic reach. Yet again, Softbank CEO Masayoshi Son is attempting to prove he wasted decades in the telco space and should have been focusing on investment management.

“Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead,” said Son.

“SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans. I am grateful to our Chief Operating Officer Marcelo Claure for leading this initiative, in addition to his other responsibilities at SBG.”

The SoftBank Innovation Fund will aim to raise funds totalling $5 billion, with Softbank contributing the first $2 billion, with a particular focus on e-commerce, digital financial services, healthcare, mobility and insurance.

For years, Latin America has been promised as a land of fortunes. With several economies on the verge of blossoming, the realities of the world have staggered success. Political controversies, violence, poor infrastructure and hostile environments have been some of the reasons this region has yet to properly flourish, however the statistics are on its side.

Since 2000, over 50 million people in the region have entered the middle class, increasing the amount of disposable income flowing around the local economies. Internet and smartphone penetration have grown considerably, to 375 million and 250 million respectively. E-commerce sales have jumped from $29.8 billion in 2015 to $54 billion in 2018, suggesting digital society is bedding in.

Combining all of these factors suggest there are fortunes to be made with the right execution. Many have failed to capitalise on the promise, but there has been renewed enthusiasm in recent years.

Liberty Global is excellent example of a company which seems to think this is a market set to burst. Over the last couple of years, Liberty Global has been trimming back its exposure in Europe, note its recent asset disposals to Vodafone in Germany and Sunrise in Switzerland, as well as spinning off Liberty Latin America as an independent, publicly-traded company. Chairman John Malone has built a successful business over the last few decades, and now he clearly spots something he likes in the Latin American markets.

Another interesting development is over at Telefonica. The Spanish telco is seemingly positioning Aura as a potential competitor to the Google and Amazon digital assistants, fighting to manage the consumer’s digital ecosystem, though initial launches have been focused on its Latin American business units, not its domestic market.

Latin America is a market which has consistently failed to deliver on the promise, but eventually the bubble will burst, and fortunes will be made. Whether this is another false dawn remains to be seen but laying the foundations for the future is not necessarily a bad move.