The State of Cyber Security in 2025: Challenges and Opportunities for Founders

As a global search and build firm, Trident Search is a trusted partner to leaders from across the cyber security industry. Speaking to founders and executives every day means we benefit from a unique birds-eye view across the sector, with an in-depth understanding of the challenges and opportunities businesses are facing.

With three months already behind us in 2025, we’re getting a clearer picture of how this year is unfolding for the cyber security sector – it’s definitely going to be one of both high-stakes challenges and promising opportunities.

The sector is seeing continued growth, with $16.1 billion invested in 2024 demonstrating its critical importance in the global economy. However, founders are facing mounting pressures, from navigating market saturation and increased M&A activity to securing funding amid evolving investor priorities.

In this article, we’ll highlight the key challenges founders must tackle and the strategies they can use to stay ahead in a rapidly changing landscape. For a more detailed breakdown of market trends and insights, read our full report here!

Market Trends and Challenges

How is the market trending now?

1. With the rise of AI, we’re seeing a shift in the cyber security space with vendors either bolstering their products with AI or newcomers bringing innovative AI products to market. These platforms are poised to disrupt traditional methods and enhance threat detection capabilities.
2. The shifting political landscape, particularly between the Trump and Biden administrations, is expected to impact cyber security regulations. It is unclear yet to what extent his cyber security policy and recent mass layoffs in federal agencies will have on investor confidence in the private sector, but with the continued escalation of global threats we expect to see increased scrutiny and investment in national security.
3. With more favourable conditions on the horizon we have a strong list of candidates for IPO, including Snyk, Cohesity, Wiz, Illumio and OneTrust.
4. There’s a big potential for M&A activity due to the increased competitor landscape, providing an opportunity for increased consolidation. We expect to see vendors seek economies of scale and competitive differentiation.
5. The talent gap is set to widen in 2025, leaving leaders struggling to fill critical roles. With an estimated 3.5 million positions empty across the industry, innovative recruitment strategies, investment in training and development and a focus on creating supportive work environments to attract and retain skilled professionals will be necessary in order to safeguard against evolving cyber threats.

The tech on the forefront of the industry:

AI continues to reshape cyber security, with a growing number of vendors offering AI-backed solutions. However, the market is becoming increasingly crowded, making differentiation a major challenge. Meanwhile, securing cloud environments is becoming a top priority, as more critical infrastructure organizations integrate operational technology (OT) with IT systems, driving increased investment in cloud security.

We’re seeing a Mergers & Acquisitions (M&A) surge

Consolidation is picking up speed, with 45 cyber security-related M&A deals announced in January 2025 alone. Private equity firms are actively acquiring established cybersecurity companies, with notable deals including:

• Trend Micro ($8.54B valuation)
• SailPoint’s Nasdaq listing ($1.38B)
• Cisco acquiring Robust Intelligence

This trend signals a shift towards integrating security solutions and expanding market reach, but it also means increased competition for smaller players looking to carve out their niche.

Fundraising is a clear priority

While investment remains strong, raising capital has become more challenging. Founders face a higher bar for securing funding, with investors prioritizing profitability over hypergrowth. In 2024, 439 funding deals over $1M were closed, broken down into:

• Seed: 36% (159 deals)
• Early-stage: 34% (149 deals)
• Late-stage: 30% (131 deals)

Investors are scrutinizing business models more closely, making it critical for startups to showcase a clear path to profitability.

What challenges are founders facing now?

• The cyber security space comes with a significant R&D price tag. With the market changing so quickly, companies have to continually adapt and reinvent to meet demand and stay ahead of competition.
• The market has been saturated by an influx of new vendors entering the space due to significant VC investment. This is driving hyper-competition and has resulted in end-users feeling overwhelmed by choice – all in all, a perfect catalyst for consolidation plays.
• We’re emerging from the rubble of the market downturn, so sourcing capital is both more expensive and treacherous than before. As a result, we have seen a trend of down rounds and a drag on valuations.
• A constant demand to attract and retain top talent and provide high performers with a career path means compensation plans are now critical to retain top sales performers who can demand strong OTE elsewhere.

What can you do to stay ahead of the curve:

• In a crowded industry, being able to clearly explain why your technology is superior, and using data and real-world impact to show how you’re solving problems your competitors can’t, will help to demonstrate the unique value in your GTM strategy.
• Startups in our sector need a solid operational foundation that allows them to scale quickly. This includes having streamlined processes, financial discipline and an agile workforce. Being strategic with the skills your new hires bring to the table, rather than splurging on big team builds, will pay dividends.
• A strong C-suite with experience in scaling businesses and securing funding is critical. Surround yourself with key advisors who understand the market and can help identify both opportunities and potential risks.
• Expanding into new markets is no easy task. You must consider cultural nuances, regulatory differences and language barriers to ensure your product resonates. Putting the right first hires on the ground, building relationships with key stakeholders and ensuring the platform is fully localized can be the difference between success and failure.
• Attracting funding requires more than just a strong product. Founders must leverage storytelling (backed by data of course) to communicate your company's market position, growth potential and Total Addressable Market (TAM). A well-crafted equity narrative helps secure investment and strategic partnerships.
• Whether aiming for acquisition, IPO or continued independence, having a clear long-term vision and exit strategy is essential.

Looking ahead

2025 is shaping up to be a pivotal year for cyber security. While the industry faces funding pressures and heightened competition, AI-driven security automation, cloud security and strategic M&A activity present major opportunities. Founders who adapt, differentiate and build resilient business models will be best positioned to thrive.

At Trident Search, we partner with visionary investors, inspiring founders and high-growth companies to help them build the leadership teams they need to succeed. For more insights and industry intelligence, read our full report or get in touch.