Last Updated on: 21st November 2023, 09:42 pm
Risk of Venture Capital Losses Highlighted By DynaRisk: Cybersecurity Gaps Found in Companies Backed By London’s Top VC Funds
- Of the 5,482 companies analyzed within venture capital portfolios, every single company had detectable cybersecurity issues.
- 65% (or 3,565 companies) demonstrated ‘High’ rated risk signals, while 8.6% (equivalent to 470 companies) displayed ‘Critical’ risk signals.
- Examples of these risk signals include data breaches, utilization of outdated/vulnerable software, and evidence of hacker discussions on the dark web, all of which are known catalysts for hacking activity.
- A fintech portfolio company, identified by DynaRisk in November 2020 for having a critical vulnerability, raised £5.5 million in February 2021 and by May 2021 faced a ransom attack. This illustrates a gap of 139 days wherein the issue could have been addressed.
- The cybersecurity company’s software, “Breach Check,” is designed to help fund managers protect their investments and ensure security, growth, and enhanced management team engagement.
DynaRisk, the intelligence-led cybersecurity software company, has released a report that reveals troubling cyber security issues present within the portfolio companies of leading Venture Funds with a presence in London. The analysis of 5,482 companies found that every single one of them had cybersecurity issues that could leave them exposed, with 65% (3,565) exhibiting ‘High’ rated Risk Signals, and 8.6% (470) exhibiting ‘Critical’ risk signals.
Andrew Martin, CEO of DynaRisk, commented: “These alarming statistics indicate that every VC fund has a number of companies in its portfolio that are highly susceptible to cyber attacks. A successful cyber attack can cause a potentially existential risk to a business by impacting its ability to operate, damaging its reputation or suffering large financial losses from hundreds of thousands to millions of pounds.”
Martin continued: “One particularly notable case from DynaRisk’s research involved a fintech portfolio company. In November 2020, DynaRisk observed a critical vulnerability in the company’s system. Subsequently, in February 2021, the company announced a £5.5 million fundraise led by a UK VC fund, and in May 2021, the portfolio company fell victim to a ransom attack. Had this fund been monitoring the company for cyber risks during the due diligence stage or after joining the company’s board, the hack could have been prevented, and the risks to the business greatly reduced.”
The report aims to raise awareness among fund managers about the urgent need to incorporate cyber risk monitoring as an essential part of their due diligence and portfolio company monitoring processes. To help with this, DynaRisk has created software, Breach Check, which empowers them to safeguard their investments, supporting them in maximising secure growth, minimising risk and leveraging the insights generated to increase engagement with management teams.
DynaRisk is dedicated to bridging the gap in the market for simplified and accessible cybersecurity solutions supported by robust threat intelligence.
