Many leaders in the cybersecurity industry believe that following the recent bankruptcy of IronNet, other companies may soon follow suit.
Speaking to SC Media, they said that IronNet may not be the only case of its kind that we witness, due to the recent speculative investment in the industry and the failure of firms to pay off their debts.
Leaders therefore felt that similar companies to IronNet may have to initiate layoffs, merge with other companies, or go outright bankrupt. IronNet first axed staff last year in an attempt to stay afloat, but then terminated its remaining staff and operations altogether on September 29 2023.
How to avoid closure
IronNet was valued at $1.2bn when it went public, however, its troubles began when it was sued by shareholders for allegedly overestimating its potential for growth. It then struggled to secure payment from clients and debts began to grow. As part of the Chapter 11 restructuring plan, IronNet will be paying back $35mn owed to creditors via asset sales.
“We will see more of these bankruptcies with highly leveraged cybersecurity companies, even those with ‘unicorn status’,” said Approov CEO Ted Miracco. In light of a recent report showing a 6% expansion in security budgets, Miracco added that, "this is fundamentally incompatible with the large cadre of VC backed companies that expect triple-digit growth figures, especially in this current economic environment.”
He believed that firms who have experience doing well in such environments will be more resilient, if they also have their eyes on profits and innovation.
The issue of tool sprawl was also highlighted, with its propensity to create inefficiencies and high costs. So it is expected that vendors will broaden the scope of their cybersecurity platforms to transform them into more holistic solutions for clients.
Big names in the industry have recently announced layoffs, including Cisco, Fortinet, HackerOne, Secureworks, and others. Quanergy Solutions, SunGard Availability Services, and Cyren are also a few examples of firms who have filed for bankruptcy protection this year.
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