Investors Losing Interest in Security?

By John Honovich, Published Aug 03, 2009, 08:00pm EDT

VentureBeat has an interesting analysis on VCs losing interests in security startups [link no longer available]. The article focuses on the Information Security market so it is indirectly relevant to physical security/video surveillance. However, some of the key complaints cited by VCs are applicable to our market segments including: (1) not being recession proof and (2) poor performance of post 9/11 security startups.

In 7 years since the boom started, not one of the US VC backed surveillance companies has successfully exited (many have been sold in a fire sale, more are coming but none of them have returned multiples of the initial investment) and I do not see any of those companies poised for a big exit in the next year or two (at least).

On the other hand, there are still video surveillance companies receiving funding. Additionally, funding appears to have increased over the past few months. Finally, investors contacting me looking for information on video surveillance companies has increased from a few per month earlier this year to a few per week recently (just an anecdote obviously).

[Update 2011: The only IPO of a video surveillance startup in North America is Avigilon.]

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