There was an increase in the number of cybersecurity funding transactions in the first quarter of 2024 compared to the same period last year but a decrease in the total amount of funding raised, according to a report by Pinpoint Search Group, a cybersecurity recruitment firm.

In the first quarter, Pinpoint recorded 101 transactions in the cybersecurity vendor space, totaling $2.3 billion across 77 funding rounds and 24 M&A events. This represents approximately a 2.7% increase in transaction volume from 75 in the first quarter of 2023 and a 20% decrease in fundraising from the previous year’s $2.9 billion.

The decline in cybersecurity funding fails to capture the whole picture, according to Pinpoint. While still not exceeding last year’s numbers, the first quarter figures indicate the possibility of an optimistic outlook ahead for cybersecurity companies.

For example, March 2024 highlighted a significant milestone in cybersecurity funding, with $1.4 billion raised in 42 funding rounds; this was the first time Pinpoint observed monthly funding exceed $1 billion since February 2023. This could suggest that, despite earlier setbacks, the cybersecurity sector is regaining momentum.

Pinpoint said that another bright spot is the notable resurgence of late-stage rounds. While seed funding accounted for 42% of all funding last year and in the first quarter, late-stage rounds made some headway in terms of transaction volume and funding dollars compared to most of 2023.

In the first quarter, for example, the firm tracked 14 late-stage funding rounds (Series C and beyond), compared to an average of 11 such rounds throughout 2023. If later-stage VC-funded vendors can sustain their ability to attract funding, 2024 promises to be a better year for the sector and its community of professionals, the firm noted.