Mergers and acquisition deals indicate a high-growth period for the application security market

Print

Email

Rising digitalization to improve consumer experience across the board has resulted in the widespread deployment of application programming interfaces (APIs) over the last five years. While these APIs are known to improve and enhance the consumer experience, the same is also putting the personal information of the customers at risk. This has resulted in a high demand for application security tools and platforms worldwide.

The market, over the next five years, is expected to record strong growth globally. Consequently, to tap into the high-growth industry, firms are entering into mergers and acquisitions deals to enter the application security market. In H1 2023, several mergers and acquisition deals took place in the global market. This includes the acquisition of Polar Security by IBM in May 2023 and the acquisition of Canonic Security by Zscaler in February 2023. The trend has further continued in H2 2023, with Thales acquiring cybersecurity firm Imperva for US$3.6 billion in July 2023.

• Thales is purchasing the cybersecurity firm from private equity firm Thoma Bravo, which paid US$2.1 billion for Imperva in 2018. The acquisition is expected to bring in nearly US$500 million of revenue for Thales. Notably, the products offered by Imperva help businesses protect critical applications, APIs, and data.

The acquisition enables both firms to elevate their operations. For Imperva, the agreement will enable the firm to expand its expertise in data security. For Thales, the deal will allow the firm to enter into the fast-growing application security market, which is poised for an accelerated growth trajectory over the next five years.

With the competitive landscape growing at an accelerated pace in the application security market, amid the rising trend of mergers and acquisition deals, other players are also launching new products and features to make their offerings more robust for businesses globally.

• Cisco, for instance, launched its SSE platform and also announced Cisco Multicloud Defense to bolster its application security offerings to its clients. Furthermore, the firm also bolstered its application security play with upgraded Panoptica, the native application security solution from Cisco. The solution is expected to help its client better identify risks and remediate the most important vulnerabilities.
• Bionic, is another firm in the application security space, that has launched new tools for addressing application security vulnerabilities. The firm, in June 2023, launched two features, including Bionic Signals and Business Risk Scoring. Bionic Signals aims to tackle the intricate problem of security tool sprawl, while Business Risk Scoring is specifically tailored to handle context-rich risk assessment, prioritization, and remediation within application security.

Going forward, TechInsight360 expects more such application security firms to launch new products and features, which will enable the firms to further strengthen their position in the growing market.

The rising need for application security services and products has also resulted in startups entering the market. Notably, the entry of these new and innovative startups in the segment is also expected to drive the competitive landscape in the market from the short to medium-term perspective.

• Kodem Security Inc., in June 2023, announced that the firm has emerged out of stealth with a fundraising deal of US$25 million. The capital comes from two different funding rounds, including US$18 million in a Series A round led by Greylock and a US$7 million round that was co-led by Greylock and TPY Capital. The firm is planning to utilize the capital to expand its global presence and launch the platform for businesses worldwide. Currently, the firm is serving businesses in sectors like financial services, insurance, and technology.
• Savvy, another application security firm based out of Israel, announced that the firm has exited stealth mode with US$30 million in funding in July 2023. The investment was raised in two different rounds, including US$10 million in a seed round in 2021 and US$20 million in a Series A round that was led by Canaan. Founded in 2021, Savvy provides a solution that tackles the challenges raised by the increased adoption of SaaS applications within organizations. Savvy's platform stands out for its seamless integration into the user's work environment, effectively safeguarding against hazardous applications of generative AI, data leaks, and potential supply chain risks.

From the short to medium-term perspective, TechInsight360 expects more such innovative startups to emerge in the application security segment, thereby supporting the growth of the market. Overall, the market is poised for accelerated growth over the next five years, and TechInsight360 expects the trend of mergers and acquisitions to keep continuing in H2 2023.