A recent story in Forbes stated that Norse Corp. - which raised more than $40 million in VC funding - looked like it may be shutting down, according to a blog posted by Brian Krebs, a well known investigative reporter who covers the cybersecurity industry.
The worldwide cybersecurity market is trending up, and expected to grow from $75 billion in 2015 to $175 billion by 2020. From 2013 to 2015, cyber crime costs quadrupled - and it looks like there will be another quadrupling from 2015 to 2019. Juniper research recently predicted that the rapid digitization of consumers’ lives and enterprise records will increase the cost of data breaches to $2.1 trillion globally by 2019, increasing to almost four times the estimated cost of breaches in 2015.
Cyber threat intelligence is one of the hottest and fastest growing security sectors, which is forecast to reach nearly $6 billion by 2020, according to market researcher Markets and Markets. Norse was an early mover in the space, and the company had a lot of momentum by all appearances - that is until the Silicon Valley high-flyer's website suddenly shutdown a few days ago.
Sam Glines, Ex-CEO at Norse, wrote a full statement in response to Krebs' blog and the media reports which followed. An excerpt on when and how his firm took a nose dive:
"Norse was in the latter half of 2015 running at an aggressive monthly burn to put out groundbreaking product and capabilities. Unfortunately, we were building ahead of very near-term revenue. This, coupled with lesser than expected sales in 2H 2015, and the delay in our planned Series B financing led to the perfect financial storm that drove the need to cut back our workforce. And I take full responsibility for these mistakes."
A story in The Register suggests that Glines, who was fired as CEO this past Monday, wasn't well-liked by Norse employees. Some of those employees went on the record in Krebs' blog.
Glines deserves credit for coming forward with a statement and taking full responsibility for Norse Corp.'s failures. He could have easily kept quiet and waited a few months to resurface as CEO at another VC-funded cybersecurity startup.
Norse Corp. is hardly the only cyber startup which crashed, and they certainly won't be the last. There's $100 billion in cybersecurity spending up for grabs over the next five years - and the VCs have placed their bets on hundreds of new market entrants and emerging players over the past couple of years. Some of these companies will ultimately reward their shareholders when they take part in a liquidity event such as an IPO, merger or acquisition. The others will simply run out of money - which is investor nomenclature for 'crash'.
