Report Analyzes Exit Strategies for VC-Funded Cybersecurity Startups in Post-COVID Era
The survey reveals that 41% of Indian investors now favor secondary deals over more traditional exit strategies like IPOs, buyouts, and acquisitions. These transactions have been identified as a means to enhance liquidity, with 92% of investors acknowledging an increase in liquidity through secondary exits. This trend is further supported by the emergence of secondary-focused funds launched by venture capital firms.
An analysis by Acrew Capital reveals evolving exit strategies for cybersecurity startups, emphasizing a shift in benchmarks and expectations in the post-COVID landscape. The report highlights the need for these companies to adapt to changing market dynamics, which now demand longer timelines and greater operational scaling before a successful exit can be achieved.
Extended Timelines and New Exit Dynamics
According to the Acrew Capital report, the average period for cybersecurity startups to reach an exit has extended to 11-12 years since the Post-Financial Crisis. This extended timeline is indicative of the increased complexity and scale required for successful exits in the current market. The report identifies five distinct eras of exit dynamics that have characterized the startup landscape over recent decades, noting a trend towards increased financial scale as a prerequisite for exiting.
Startups are now required to scale their operations significantly to meet market demands, which are driven by exponential changes in technology and cybersecurity needs. The post-COVID era has redefined what benchmarks are necessary for a startup to be considered mature enough for an exit, whether through an IPO, acquisition, or buyout.
Financial Support and Investment Trends
In response to these evolving challenges, $6.2 million has been allocated by the NJ Innovation Evergreen Fund to support startups, particularly in cleantech and artificial intelligence (AI). These sectors are seen as critical areas for growth and innovation, and the fund aims to bolster startups that are addressing these domains.
Investments in cleantech and AI are part of a broader trend of diversifying support for startups beyond traditional cybersecurity solutions. This diversification is intended to provide a more robust foundation for startups as they navigate the complex landscape leading up to a potential exit.
Shift Towards Secondary Exits
There is a noticeable shift in preference among investors towards secondary exits, as indicated by a survey conducted by Inc42 for Q3 2025. The survey reveals that 41% of Indian investors now favor secondary deals over more traditional exit strategies like IPOs, buyouts, and acquisitions. This trend is further supported by the emergence of secondary-focused funds launched by venture capital firms.
Investors are increasingly inquiring about liquidity timelines, reflecting a maturing market where secondary share transactions are becoming a viable option. These transactions have been identified as a means to enhance liquidity, with 92% of investors acknowledging an increase in liquidity through secondary exits. This maturation points to an organized market for secondary funds, which allows early investors to exit efficiently.
Outlook for 2025 and Beyond
Looking ahead to the 2025 IPO cycle, significant liquidity is anticipated as secondary funds continue to gain traction. The increase in secondary funds, particularly in India, suggests a more organized and investor-friendly market for those seeking exits. This organized channel not only benefits investors but also facilitates a smoother transition for startups looking to scale and eventually exit.
The market for secondary funds is becoming more structured, providing a clear avenue for investors to realize returns on their investments. This evolution is crucial as the cybersecurity startup landscape continues to adapt to post-COVID realities, where the ability to scale operations and meet new benchmarks will dictate the success of exit strategies.