Page 72 - Cyber Defense eMagazine January 2023

There are reasons to be optimistic about the future for Europe, though. As the publication of the report
attests, there is now political will to improve the situation. Europe’s politicians have woken up to the fact
that strategic autonomy in cybersecurity is in the supranational interest, just as they have done with
semiconductors.

The US has some obvious advantages. It is the world’s largest economy, home to Silicon Valley, Wall
Street, and the world’s largest healthcare industry - all are significant buyers of cyber products and
services and represent a lucrative domestic market to sell into.

America’s cyber policymaking is also highly centralised. The National Security Agency (NSA) - the US
intelligence service - sets standards and best practices that are followed across state lines and
international borders. This is a major advantage for globally expanding companies.

Close proximity to the government benefits America’s cyber industry in other ways. It is at once a deep-
pocketed customer, a source of world-class talent (which moves fluidly between the private and public
sectors), and it is a co-collaborator on innovative R&D projects.

These factors have all played a role in building America’s cyber industry, they are not impossible to
replicate in Europe. The EU is the world’s third-largest economy and it is hardly bereft of corporate giants
who are willing to spend big on keeping their data secure.

Europe lacks a powerful centralised security service, such as the NSA, but has its own unique strengths.
The EU already enforces the world’s tightest data protection and privacy laws and intends to double down
on the issue in years to come. This should be a boon to cybersecurity companies which essentially sell
the protection of digital assets.

Where Europe falls behind Americ

Economics and institutional support alone do not account for the gap between Europe and the US.
Instead, look to the size and shape of the venture capital industry.

US venture capital far outstrips Europe in a few areas. The first is its scale. As illustrated by the European
Commission’s recent report, there is significantly more capital available in the US than in Europe across
every stage of investment. The figures speak for themselves: in 2021 European cybersecurity firms raised
€814m from venture capital firms, whereas US cybersecurity companies raised more than €15bn over
the same period.

The US is also home to a greater number of investors that specialise in cybersecurity. US venture firms
like Accel and Greylock Partners have highly-specialised teams who have backed many of the world’s
largest cyber companies.

Importantly, top-tier US VCs can and will back companies from seed stage up to Series D, E and beyond.
The specialist funds in Europe tend to be smaller, local operations that only have the capacity to back
seed-stage firms with smaller cheques.

Cyber Defense eMagazine – January 2023 Edition 72
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