There’s a movement going on and it’s shaking up the venture capital scene. It’s called the BYOD (bring your own device) movement—the use of personal computing devices (connected to a corporate network) in the workplace. Fueled by the cloud, as well as the ever-increasing abundance and availability of smart mobile devices, BYOD represents progression, technological advancement and consumerization. It benefits businesses and their employees, and is changing the way the modern office functions. But along with its advantages, there’s a downside for enterprises: network vulnerability. When employees bring their own devices to the workplace, they also bring their own applications and cloud services, taking much of the control (as far as how/what devices and services are used) away from corporate IT. This vulnerability is exactly what startups are cashing in on, evidenced by increasing VC investment in the cloud security and management market.
Since the beginning of 2010, VC investors have backed 144 companies that secure, manage or monitor information in the cloud, encompassing 244 deals, according to the PitchBook Platform. While VC activity in 2010 and 2011 barely differed ($302 million invested over 50 deals, $278 million invested over 48 deals), 2012 saw an explosion of VC involvement, accounting for more capital invested ($689 million) than the previous two years combined ($580 million). The number of deals completed also drastically increased, nearly doubling from 48 in 2011 to 90 in 2012.
Of course, not all of the cloud security and management companies landing VC cash are tailored specifically for BYOD, but the network security risks that the movement presents demand a significant amount of their focus. A good example of this is cloud security company Zscaler, which raised $38 million in funding from Lightspeed Ventures last August. Among Web and email security services, the company also offers a solution to help businesses embrace BYOD by managing personal devices and protecting corporate assets. Similar companies that have landed significant financings include CipherCloud, Skyhigh Networks and PerspecSys, all of which completed deals within the past year.
Protection of corporate resources is of utmost importance to every business, so it’s understandable that a BYOD environment isn’t universally accepted (yet). But with the deployment of cloud security software and the right usage policies in place, the benefits for both a business and its employees can be great.