The accelerating AI adoption by enterprises and the growing need to protect identities and access helped drive up the amount of investment in the cybersecurity arena last year to the largest levels since the pandemic in 2021, according to figures compiled by security recruitment firm
Pinpoint Research Group.
According to a
Pinpoint report, cybersecurity investments in 2025 reached $13.97 billion, a 47% jump over the $9.5 billion spent the previous year, though still short of the $20.6 billion seen in 2021.
The number of deals made during the year also increased, with 392 funding rounds recorded. In 2024, that number reached 304.
“The trajectory is notable,” the report’s authors wrote. “Following the sharp contraction from 2021 to 2023, funding stabilized in 2024 and accelerated in 2025. This rebound is not the result of indiscriminate capital deployment. Instead, it reflects renewed confidence paired with higher selectivity, with investors concentrating capital into companies demonstrating technical depth, operational discipline, and relevance to evolving buyer priorities.”
They noted that while 2025 was the strongest funding year for cybersecurity vendors since 2021, the money is “moving differently now.” As Pinpoint found in a
mid-year report in July, more of the funding is being directed at early-stage vendors that have credible teams and fast iteration, growth-stage platforms that consolidate costs or coverage core controls, and AI-native startups with automation capabilities that drive buyer value.
Such companies saw the bulk of the activity, with seed and Series A investments making up about two-thirds of the funding rounds recorded last year. That said, while later-stage and growth rounds accounted for a minority of the transactions, they received a large share of the money raised. This reflected “investor preference for platforms that can consolidate spend, replace fragmented toolsets, or address risks that have moved decisively into the boardroom,” the authors wrote.
AI in the Mix
Unsurprisingly, AI was a key factor in determining whether the investment money went. Organizations are
adopting AI agents, automation tools, and data-driven workflows so fast that it’s outpacing their ability to address governance, identity, and control frameworks around them.
The report noted that a growing number of companies that are defined as
governance, risk, and compliance (GRC) vendors are evolving from organizations that offer traditional compliance tools to control layers for AI-powered environments that address policy enforcement, auditability, third-party exposure, and identity sprawl.
“The clustering of capital into these vendors suggests that investors and founders alike see governance not as a back-office function, but as a prerequisite for scalable AI adoption,” the authors wrote.
In addition, clients and vendors in general communicate value around detection, response, and the security operation center (SOC) through automation, Pinpoint founder and Managing Partner
Mark Sasson told MSSP Alert.
“Adversaries are automating attacks, and defenders are automating defense,” Sasson said. “This requires fewer humans and serves to reduce the alert fatigue that has been reported as a problem for a long time. Overall, investment is going into companies that tout AI-native solutions that focus on automation and agentic AI to solve problems more precisely and combat AI-oriented attacks on their customers.”
Identity as Security Control Plane
Identity, which is a focus of threat actors, has also become a connective tissue stretching across cloud, data, fraud, and governance as cloud complexity, AI use, and third-party access expand.
“What funding patterns in 2025 reinforce is not identity’s importance, but its role as the control plane through which modern security decisions are enforced — shaping access, accountability, and policy execution across the stack,” the authors wrote, illustrating “why identity-aligned platforms continue to attract capital even as category boundaries blur and buyers prioritize outcomes over tool.”
“At a time when the entire structure of access is being reconsidered, and innovation is rewarded with investment, it’s a no-brainer that identity will continue to be a focal point,” Sasson said. “Eliminating static credentials serves to reduce the threat coming from dormant access points, and it’s doing so through automation.”
To back that up, he pointed to CrowdStrike’s January 8 announcement that it plans to
buy security startup SGNL for $740 million, a deal aimed at bolstering
CrowdStrike’s Falcon Next-Gen Identity Security platform by eliminating static credentials and automating access decisions.
Investments Benefit MSSPs
Sasson pointed to Pinpoint itself as an example of how MSSPs can benefit from the growing investments in cybersecurity.
“I can say from being a small business owner that I don’t have the time and resources to invest in a comprehensive cybersecurity strategy, and I don’t have a clue about how to implement a strategy with the tools available on the market,” he said. “For many SMBs that have deployed a security strategy and solutions, the market just shifted on them just about overnight. They need a new strategy, and how that correlates to the tools they should be running in their environments. That’s exactly where an MSSP can add value.”
