Cybersecurity Startup Failures

API security unicorn sold to Akamai for half its peak valuation after CISO budgets froze.

Oracle and SAP built their sanctions tool natively — and took 60% of the client base in one product cycle.

The AI cybersecurity unicorn IPO'd at £2.3B and was taken private at a major discount after short-seller attacks

Behavioral biometrics pioneer that Goldman backed but the market couldn't scale.

KYC-as-a-service startup that couldn't verify its own survival.

A decade of privacy-first identity APIs couldn't crack the commercial code.

Identity posture management startup shut down in 2023 after ISPM market collapsed before it matured.

Spain's SSI identity pioneer absorbed before self-sovereign ideas could scale.

Founded by the NSA Director. Raised $109M. IPO'd via SPAC. Filed Chapter 11 when enterprise contracts never materialized at the scale promised.

The UK's most-funded digital ID app that consumers never felt they needed.

Enterprise privacy darling that couldn't turn data protection into profits.

The cybersecurity unicorn backed by SoftBank and Google that raised $900M and then laid off half its workforce when the Broadcom acquisition fell through

Privacy-preserving biometrics firm undone by public backlash and empty revenue.

OSS supply chain security team acqui-hired by Google before shipping a GA product.

Built government-grade file sanitization tech, then Microsoft gave it away for free.

NHS and Barclays partnerships couldn't save a personal data platform with no paying users.

A quantum-safe crypto startup rendered obsolete the moment NIST published free post-quantum standards.

Paris-born RASP pioneer swallowed by Datadog's observability empire.

Git secrets detection pioneer commoditized by GitHub then acqui-hired by CrowdStrike for its DevSecOps push.

Internal data privacy unit dissolved when parent SIEM had no room for a compliance spinout.

Cloud security OG with 400 customers sold to F5 for $68M then quietly killed in 18 months.

Seventeen years protecting kids' privacy online — still couldn't build a business.

Client-side security specialist that couldn't scale sales before Akamai decided to buy rather than beat it.

AI SOC automation startup absorbed by FireEye before it could prove standalone value.

Photo authentication tech ahead of its time — killed by commoditization and enterprise indifference.

Canada's national digital ID champion that couldn't make citizens care.

Gartner Cool Vendor turned silent shutdown after failing to unseat Splunk in mid-market.

Zero-trust SSH and RDP access startup absorbed by Perimeter81 before the ZTNA wave fully arrived.

IBM and Cisco backed it — but nobody paid the bills for self-sovereign identity.

Identity threat detection pioneer acquired by CrowdStrike for $96M, brand erased within months.

Identity risk scoring for banks that couldn't outrun LexisNexis and Equifax.

French ICS security pioneer absorbed by Cisco, its OT detection engine buried inside network switches.

Twelve-year data masking veteran sold below book value as GDPR window closed without growth.

Container security pioneer sold for $410M then dissolved into Palo Alto's Prisma Cloud machine.

DevSecOps orchestrator that couldn't escape the shadow of Veracode and Checkmarx.

18 years, countless EU regulations, zero commercial scale — a German identity cautionary tale.

Technically superior Splunk challenger raised $30M only to sell distressed assets back to the competitor it feared.

Sold for $44M before growth flatlined completely — a lucky exit, not a win.

Deception-based threat detection — the idea was right, the timing was wrong

Cyber risk management platform sold to Vista Equity after Palo Alto and others absorbed the category

The Israeli endpoint security unicorn that SoftBank backed with 900 million dollars and could not dislodge CrowdStrike

Data rights management platform raised $70M and was wound down after WatchGuard acquisition.

Lacework raised $1.9B including at an $8.3B valuation — then cut 75% of its workforce in 2023 and sold to Fortinet for a fraction of what investors put in

Spanish SME cybersecurity startup acqui-hired after failing to differentiate from global giants

Cloud security posture management before Wiz made it obvious — and very expensive

Endpoint resilience pioneer taken private by Crosspoint Capital after losing ground

Tel Aviv's SASE pioneer was absorbed by Check Point as SASE category consolidated

Mexico's cybersecurity startup trapped between SMEs that wouldn't pay and enterprises that already had vendors

AI wildfire detection startup raised $30M but government procurement moved too slowly to sustain the business

Copenhagen's SaaS backup platform couldn't differentiate as Microsoft and Veeam dominated the backup market

The zero-trust ZTNA pioneer that went public via SPAC and filed Chapter 11 two years later

CASB security pioneer raised $150M and was sold below its funding total as the market consolidated.

Live cyber threat map famous globally, shut down overnight

Cloud security pioneer raised $550M then faced a brutal down-round fight for survival

Hardware-enforced browser isolation — technically brilliant, commercially exhausted

Irish data privacy encryption startup found AWS and Azure privacy vaults commoditizing the category

Identity verification unicorn over-hired and over-expanded in a market that cooled

Bot detection leader acquired by HUMAN Security — brand dissolved after merger.

Spain's SME cybersecurity startup undercut by the global giants it helped validate

Costa Rica cybersecurity startup during the Conti ransomware attack — the government used US CISA assistance and enterprises used US parent cybersecurity

Financial services cybersecurity startup squeezed between IBM and Palo Alto Networks

Ecuador cybersecurity blocked from public procurement by 3-year SERCOP track record requirement while IMF, IBM, and Fortinet covered the primary enterprise market

Israeli deception technology pioneer raised $90M and was absorbed by Proofpoint before the category matured.

Engineering intelligence platform raised $20M but could not break through to C-suite cybersecurity budgets

British AI email security startup that raised 130 million dollars and sold to Proofpoint for a fraction of its peak value as Microsoft built competing features natively.

SoftBank-backed endpoint security unicorn raised 900 million dollars but could not convert deep-pocketed investor support into sustainable enterprise market share before running out of options.

Zero-trust infrastructure security startup acquired by Cisco and folded into UCS.