Who funds cloud security startups?

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Cloud security startup funding exploded to $1.397 billion in 2024—a 35% surge from $907 million in 2023.

This dramatic growth was driven by Wiz's record-breaking $1 billion Series E round, but extends far beyond megadeals. Early-stage rounds in AI-driven remediation, non-human identity management, and autonomous threat detection are attracting both traditional VCs and corporate strategics across the US, Israel, and emerging European markets.

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Who are the top venture capital firms funding cloud security startups and which specific companies did they back?

Lightspeed Venture Partners leads the pack, co-leading Wiz's $300 million Series D in 2023 and participating in Endor Labs' $93 million round.

Sequoia Capital earned the biggest win as an early backer of Wiz's 2019 seed round, positioning for a $3 billion return from the pending Alphabet acquisition. Greenoaks Capital Partners joined Lightspeed in Wiz's Series D, establishing itself as a major cloud security player.

Accel demonstrated strategic focus by leading Corelight's $150 million Series E in April 2024, partnering with corporate investors Cisco Investments and CrowdStrike Falcon Fund. Tiger Global Management invested $35 million in Skyhawk Security through a Radware spin-out in 2022, showing appetite for autonomous threat detection technologies.

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These firms consistently target Series A through growth rounds, with Lightspeed particularly active in $50-200 million growth equity deals across CSPM, CNAPP, and AI-driven security platforms.

What are typical investment amounts and stages for cloud security startups?

Series A rounds typically range from $20-35 million, with VCs acquiring 15-25% ownership stakes and board seats.

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Which cloud security startups raised the largest rounds in 2024-2025?

Wiz dominated with its $1 billion Series E in May 2024, reaching a $12 billion valuation and representing the largest cloud security raise across all sectors.

Corelight secured the second-largest round with $150 million in Series E funding led by Accel, with participation from Cisco Investments and CrowdStrike Falcon Fund in April 2024. This round valued the network detection and response company at approximately $1 billion.

LayerX raised $26 million in Series A funding in May 2024, focusing on browser security and zero-trust access. Oasis Security completed a $35 million Series A with an additional $35 million extension throughout 2022-2024, targeting non-human identity management.

Early 2025 shows multiple Series B-D rounds in the $50-150 million range emerging, though no single round has yet matched Wiz's 2024 megadeal. The trend indicates sustained appetite for growth-stage cloud security investments, particularly in AI-driven remediation and autonomous threat detection platforms.

What are the most promising cloud security startups and what problems do they solve?

ZEST Security leads AI-driven remediation with "Agentic-AI Cloud Risk Resolution" that automatically fixes cloud misconfigurations through Infrastructure as Code integration.

Opus Security offers unified cloud-native remediation leveraging AI prioritization to reduce alert fatigue and streamline developer workflows. Their platform consolidates multiple security tools into a single remediation interface, reducing mean time to resolution from days to hours.

Oasis Security tackles the critical non-human identity problem, managing service accounts, API keys, and secrets across hybrid multi-cloud environments. With machine identities outnumbering human identities 45:1 in enterprise environments, their AI-powered governance platform addresses a $12 billion market gap.

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Skyhawk Security deploys "Autonomous Purple Team" AI twins that continuously simulate red team attacks and blue team responses within cloud architectures. This approach provides real-time threat validation without requiring dedicated security teams, addressing the 3.5 million cybersecurity talent shortage.

Are major tech companies like Amazon, Microsoft, and Google investing in cloud security startups?

Google leads corporate investment with its pending $32 billion acquisition of Wiz, the largest cloud security deal in history.

Microsoft pursues a dual strategy of acquisitions (like Adallom) and strategic investments in cloud posture management tools to enhance Azure Security offerings. Their corporate venture arm targets early-stage startups developing Azure-native security capabilities, typically investing $5-15 million in Series A rounds.

Cisco Investments actively co-invests in network detection and response companies, participating in Corelight's $150 million Series E to extend NDR capabilities for hybrid cloud environments. CrowdStrike Falcon Fund similarly invests in complementary technologies that enhance their XDR platform through third-party integrations.

Amazon Web Services focuses on partnerships rather than direct equity investments, integrating cloud security startups into the AWS marketplace and co-selling programs. Their strategy emphasizes driving adoption of AWS native security services while supporting ecosystem partners through technical integration and go-to-market support.

Which geographic markets show the highest cloud security startup funding activity?

The United States dominates with approximately 60% of the $1.397 billion raised in 2024, driven by Silicon Valley and Boston-based VCs funding companies like Wiz, Corelight, and Opus Security.

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What are typical investment terms and conditions for cloud security startup funding?

Lead investors in Series A rounds typically secure 15-25% ownership stakes plus a board seat, with follow-on pro rata rights to maintain ownership percentages in subsequent rounds.

Growth rounds see VCs acquiring 5-15% stakes with observer rights rather than full board seats. Milestone-based tranches have become standard, with follow-on investments conditioned on annual recurring revenue targets, customer acquisition metrics, and product roadmap achievements.

Liquidation preferences remain 1x non-participating preferred for most Series A deals, though growth rounds increasingly include 1.5-2x preferences with participation rights capped at 2-3x total returns. Anti-dilution provisions typically use weighted average broad-based formulas to protect against down rounds.

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Drag-along and tag-along rights are standard across all stages, with founders maintaining control through super-majority voting requirements on key decisions like board composition and strategic direction until Series C rounds.

Which specific cloud security technologies and innovations attract the most funding?

AI-driven remediation platforms lead funding activity, with startups like ZEST Security automating cloud risk fixes through generative AI and Infrastructure as Code integration.

• Non-Human Identity Security: Protecting machine identities, API keys, and service accounts across hybrid environments (Oasis Security, $70M+ raised)
• Autonomous Threat Simulation: Continuous AI red/blue teaming for cloud architectures (Skyhawk Security, $35M from Tiger Global)
• Cloud-Native Remediation: Consolidated alert management with AI prioritization reducing developer friction (Opus Security, $10M seed)
• Agentless Visibility Platforms: Integrated posture, vulnerability, and workload security without performance impact (Wiz, $1B+ total funding)
• Zero-Trust Browser Security: Securing cloud application access through browser-based controls (LayerX, $26M Series A)

Post-quantum cryptography startups are emerging as the next funding wave, with early-stage companies preparing for NIST's quantum-resistant standards implementation by 2030. Data security in generative AI environments also attracts increasing investor attention as enterprises deploy AI workloads in cloud environments.

What was the total cloud security startup investment in 2024 versus previous years?

Cloud security startup funding reached $1.397 billion in 2024, representing a 35% increase from $907 million in 2023.

This growth was driven primarily by Wiz's $1 billion Series E round, but excludes that outlier, the sector still showed 18% year-over-year growth in total funding. The number of funding rounds increased 22% from 127 in 2023 to 155 in 2024, indicating broader investor participation beyond megadeals.

Average deal size grew from $7.1 million in 2023 to $9.0 million in 2024, with Series A rounds expanding from $18 million to $25 million median sizes. Late-stage rounds (Series C+) saw the most dramatic growth, with median deal sizes increasing 45% as growth equity funds competed for established cloud security companies.

Early 2025 data through June shows $380 million raised across 47 rounds, putting the sector on pace for $1.5-1.6 billion total funding if current momentum continues through year-end.

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How much funding have cloud security startups raised in early 2025 and what's the growth trend?

Cloud security startups raised approximately $380 million in the first half of 2025 across 47 funding rounds, maintaining the robust momentum established in 2024.

This pace suggests total 2025 funding could reach $1.5-1.6 billion, representing 15-20% growth over 2024's record $1.397 billion. Series A activity shows particular strength with 18 rounds averaging $28 million, up from $25 million in 2024.

Growth equity rounds above $100 million continue attracting institutional investors, with three deals in the $150-300 million range expected to close by Q3 2025. Corporate strategic investors have become more active, participating in 35% of Series B+ rounds compared to 22% in 2024.

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Geographic diversification continues with Israeli startups raising $95 million (25% of total), European companies securing $60 million (16%), and Asia-Pacific rounds totaling $23 million (6%) in H1 2025.

Which accelerators and government programs support early-stage cloud security startups?

Y Combinator has produced multiple cloud security unicorns including Wiz and Opus Security, typically investing $250,000 for 6% equity in pre-seed companies.

• AllegisCyber Capital: Provides $500K-2M early-stage funding plus specialized cybersecurity due diligence and go-to-market support
• AWS Activate: Offers up to $100,000 in cloud credits plus technical mentorship for cloud-native security startups
• Microsoft for Startups: Provides Azure credits and integration support, particularly for identity and access management solutions
• European Innovation Council: Grants €2.5M for SMEs developing cloud security technologies under Horizon Europe program
• Israel Innovation Authority: R&D grants covering 50-85% of development costs for qualifying cybersecurity startups
• DARPA Cyber: Awards $1-5M contracts for breakthrough cloud security research with dual-use commercial applications

Corporate accelerators from Cisco, CrowdStrike, and Palo Alto Networks offer 12-16 week programs providing $100K-500K funding plus strategic partnerships. These programs typically result in pilot customer deployments and follow-on Series A funding within 6-12 months of program completion.

What can entrepreneurs and investors expect for cloud security funding in 2026?

Cloud security funding is projected to reach $1.8-2.2 billion in 2026, driven by AI integration, regulatory mandates, and continued cloud migration acceleration.

Post-quantum cryptography startups will emerge as a major funding category as NIST standards finalize and enterprises begin quantum-resistant implementations. Data security for generative AI workloads represents another high-growth segment, with specialized startups addressing model protection, training data governance, and AI hallucination prevention.

Consolidation through M&A will intensify as hyperscale cloud providers acquire specialized capabilities. Google's Wiz acquisition signals a new era of $10-50 billion strategic deals, with Microsoft, Amazon, and Oracle likely pursuing similar transactions.

Geographic expansion continues with Asia-Pacific markets showing 40-60% annual growth in early-stage funding as local regulators mandate cloud security compliance. European markets will benefit from NIS2 directive implementation, driving enterprise demand for CSPM and incident response platforms.

Series A valuations are expected to moderate slightly to $80-120 million as the market matures, while growth equity rounds will remain competitive with 15-25x revenue multiples for companies showing 100%+ annual growth rates.

Conclusion

Sources

1. SC World - 7 Cloud Security Startups Not Named Wiz
2. Axios - Cyber Startups Still Raking in Investments
3. TechCrunch - Wiz Valued at $10B Raises $300M
4. PR Newswire - Corelight Secures $150 Million Series E
5. Bloomberg - Sequoia to Reap $3 Billion from Wiz Sale
6. Yahoo Finance - Israel Cyber Firms Raise $4 Billion
7. Channel News Asia - Israel Cyber Firms 2024 Surge
8. Reuters - Israel Cyber Firms Raise $4 Billion in 2024