As Cybersecurity Firms Chase AI, VC Market Skyrockets

Dark Reading

by Robert Lemos

February 24, 2026

AI-Generated Deep Dive Summary

The cybersecurity venture capital market saw record-breaking growth in 2025, fueled by a surge in investments in AI-native security solutions and a historic wave of mergers and acquisitions (M&A). According to Momentum Cyber, a leading investment bank in the sector, VCs poured $119 billion into cybersecurity startups. This figure was bolstered by 400 M&A transactions alone, which accounted for the majority of funding, alongside 820 financing deals totaling nearly $21 billion. The total value of M&A, financing, and initial public offerings (IPOs) in 2025 tripled compared to the previous year, marking a new era for cybersecurity investments. The explosion in activity was driven by two key trends: the near-exclusive focus on AI-native security technologies and the urgent need to address rapidly expanding attack surfaces created by the growing adoption of AI within organizations. AI not only transformed product development but also reshaped the nature of threats, as cybercriminals increasingly leveraged AI tools to exploit vulnerabilities. This shift created a unique opportunity for startups developing AI-specific security solutions, such as those focused on protecting AI supply chains and securing AI-driven agents used by enterprises. The demand for these innovations was further amplified by the critical need to safeguard against emerging risks. As companies adopted more AI-powered tools without always ensuring proper IT oversight, chief security officers faced new challenges in managing these decentralized threats. The market’s momentum has carried into 2026, with January recording 38 M&A deals—a sign that this wave of activity is likely to continue. For readers interested in cybersecurity, this trend highlights the intersection of technology and risk in an increasingly digital world. The rapid evolution of AI tools presents both opportunities and challenges for businesses, making investment in robust security solutions a critical priority. As cybercriminals become more sophisticated, the demand for cutting-edge, AI-driven security technologies will only grow, creating significant opportunities for startups and established players alike. The strategic focus on acquiring cybersecurity firms underscores the growing recognition of these solutions as essential for business resilience. Major tech companies like Google, Palo Alto Networks, and Cisco have already made multimillion-dollar

Verticals

securitytech

Originally published on Dark Reading on 2/24/2026