Raising Capital for Cloud & Network Security Startups in 2025

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The cloud and network security sector is at the epicenter of the cybersecurity investment boom in 2025. As enterprises accelerate digital transformation, migrate workloads to the cloud, and embrace hybrid work, the attack surface expands, and so does the demand for innovative security solutions. For founders, raising capital in this environment requires not only a compelling product but also a deep understanding of investor expectations, funding channels, valuation trends, and the competitive landscape.

This comprehensive guide unpacks the strategies, benchmarks, and actionable insights you need to successfully raise capital for your cloud and network security startup. We’ll cover market momentum, investor types, key metrics, pitch essentials, alternative funding routes, and post-raise priorities, weaving in the latest data and linking to resources for further exploration.

Market Momentum: Why Investors Are Bullish on Cloud & Network Security

Cloud Security as a Growth Engine

Cloud security remains one of the most active and well-funded cybersecurity niches in 2025. Startups like Cybaverse (UK), which raised over $1.4 million in seed funding in late 2024, and Nillion (Switzerland), which secured $25 million in a recent venture round, underscore the sector’s global appeal and investor confidence. These companies are leveraging advanced cloud-native technologies, AI, and decentralized architectures to address the growing complexity of securing hybrid and multi-cloud environments.

Network Security: The Backbone of Modern Enterprise

Network security is evolving rapidly, with a shift from traditional perimeter defense to Zero Trust, SASE (Secure Access Service Edge), and software-defined networking. Startups like Cynomi and Endor Labs, both of which raised substantial Series B rounds in 2025, are redefining the space with automated vCISO platforms and application security for open-source code, respectively. These innovations are attracting top-tier investors and fueling rapid scaling.

Key Drivers of Investor Demand

• Cloud-first strategies and remote work have made cloud and network security mission-critical for every enterprise.
• AI-driven detection and response are now table stakes, with investors favoring startups that integrate machine learning and automation.
• Regulatory compliance (GDPR, CCPA, NIS2) and industry mandates are creating new buying cycles, especially in regulated sectors.
• Rising threat sophistication (ransomware, supply chain attacks) is pushing organizations to upgrade legacy security stacks.

Navigating the cybersecurity funding landscape starts with a clear roadmap, cybersecurity startup fundraising guide lays out the deal structures and investor criteria founders rely on.

Who’s Investing and What They Want

Venture Capital: The Primary Engine

Venture capital remains the dominant funding source for cloud and network security startups. Top VCs are drawn to the sector’s high ARR multiples, rapid growth rates, and strategic importance to digital infrastructure. According to OpenVC, founders can now access a global network of 20,000+ verified cybersecurity investors, including SaaS, AI, and fintech specialists.

Key VC Expectations:

• Recurring revenue models (SaaS, managed services)
• 2x+ YoY ARR growth
• Strong logo acquisition (enterprise and regulated sectors)
• Clear path to $10M+ ARR within 2–3 years

Corporate Venture Capital & Strategic Investors

Corporate venture arms of hyperscalers (e.g., AWS, Microsoft, Google), security vendors (e.g., Cisco, Palo Alto Networks), and large enterprises are highly active. These investors bring not only capital but also distribution, co-selling opportunities, and technical validation.

Partnering with hyperscalers can fast-track your go-to-market, co-selling with hyperscalers to attract cloud-security investment. shows how to align value propositions, pitch joint solutions, and keep the pipeline flowing.

Private Equity & Growth Funds

Later-stage startups (Series B and beyond) are increasingly attracting private equity and growth-stage funds. These investors focus on operational efficiency, profitability, and market leadership. They often drive consolidation through M&A, seeking platforms that can serve as “anchor” assets in their portfolios.

Government Grants and Public Funding

Government grants and incentives are a valuable (often non-dilutive) funding channel, especially for network security innovation in critical infrastructure, defense, and public sector. Programs in the US, EU, and Asia-Pacific are supporting early-stage R&D, pilot deployments, and commercialization.

Non-dilutive support often slips under the radar, government grants & incentives for network-security innovation  breaks down the top programs, eligibility hurdles, and application tips you need.

Alternative Funding: Revenue-Based Financing

Revenue-based financing is emerging as a flexible, founder-friendly option for cloud-security SaaS startups. It enables you to raise capital based on recurring revenue, without diluting equity or ceding board control.

If you want growth without giving up equity, revenue-based financing options for cloud-security SaaS examines how repayment terms work and when to lean into this model.

Valuation Trends & Benchmarks: What’s Your Startup Worth?

ARR Multiples and Valuation Ranges

Cloud and network security startups command some of the highest valuation multiples in tech. According to a mid-2025 analysis of 250 cybersecurity companies, ARR multiples for cloud security range from 8x to 15x, with outliers in high-growth or strategically critical segments. Data security and IAM also command premium multiples, while OT/IoT security is slightly discounted but rising.

Note: Multiples are influenced by growth rate, gross/net retention, customer concentration, and strategic fit.

Funding Rounds: Sizes and Stages

• Seed: $2M–$6M, pre-revenue or early traction, focus on team and vision
• Series A: $7M–$20M, $1M–$3M ARR, strong early customer validation
• Series B: $20M–$50M, $3M–$10M ARR, scaling GTM and product
• Series C+: $50M+, $10M+ ARR, market leadership and expansion

each funding stage removes guesswork, startup fundraising rounds in 2025 outlines what investors expect at seed, Series A, B and beyond.

Key Metrics Investors Expect: What to Track and Report

Revenue and Growth

• ARR (Annual Recurring Revenue): The single most important metric for SaaS/cloud security startups. Investors expect clear, month-over-month growth.
• YoY Growth Rate: 2x+ is considered strong; top quartile startups achieve 3x+.
• Gross/Net Retention: >90% gross and >110% net retention are best-in-class.

Customer Metrics

• Enterprise Logo Acquisition: Landing Fortune 500 or regulated industry customers signals credibility.
• Churn Rate: <5% is ideal for sticky, mission-critical solutions.
• Pilot-to-Paid Conversion: >30% conversion from pilot to paid contract is a strong sign of product-market fit.

Efficiency and Profitability

• Burn Multiple: Investors favor burn multiples below 2.5x, indicating efficient capital deployment.
• CAC Payback Period: Under 12 months is preferred, showing rapid return on customer acquisition spend.
• LTV:CAC Ratio: 3:1 or higher demonstrates sustainable growth.

Product and Technical KPIs

• Mean Time to Detect/Respond (MTTD/MTTR): Lower is better—real-time or near-real-time is a differentiator.
• Integration Breadth: Number of supported cloud platforms, APIs, and security tools.
• Compliance Readiness: Certifications (SOC 2, ISO 27001) and regulatory alignment.

Investors in SASE and Zero-Trust platforms focus on concrete KPIs, key metrics investors expect from SASE & Zero-Trust platforms highlights the usage, retention, and unit-economics data points that win confidence.

Crafting a Winning Pitch: What Investors Want to See

Essential Pitch Deck Sections

1. Executive Summary: Market challenge, solution, and traction in one slide.
2. Market Opportunity: Visualize TAM/SAM/SOM with credible data.
3. Product Differentiation: Highlight unique architecture, AI/ML capabilities, and integrations.
4. Go-to-Market Strategy: Detail customer segments, sales channels, and partnerships (including hyperscalers).
5. Customer Traction: Showcase enterprise wins, case studies, and growth charts.
6. Financials: Present ARR, growth rates, CAC/LTV, and burn multiple.
7. Team: Emphasize domain expertise and relevant track records.
8. Risk Mitigation: Address compliance, security, and GTM risks.
9. The Ask: Specify funding amount, use of proceeds, and key milestones.

Visual Storytelling

• Use charts to show ARR growth, retention, and pipeline coverage.
• Include architecture diagrams and customer journey maps.
• Visualize competitive positioning and technology differentiation.

Common Pitch Mistakes

• Overemphasizing vision without data.
• Underestimating the importance of GTM and sales repeatability.
• Failing to address regulatory and compliance risks.
• Lack of clarity on use of funds and milestones.

Alternative Funding Channels: Beyond Traditional VC

Co-Selling with Hyperscalers

What It Is:
Co-selling with hyperscalers means forming strategic partnerships with major cloud providers—Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP)—to jointly develop, market, and sell security solutions. This model has become the new gold standard for go-to-market (GTM) in cloud security since mid-2023, fundamentally changing how startups scale and access enterprise customers.

How It Works:

• Product Integration: Your security solution is built to run on, or integrate with, a hyperscaler’s cloud infrastructure, ensuring technical compatibility and ease of deployment for customers.
• Joint Go-to-Market: You and the hyperscaler collaborate on sales, marketing, and customer success, leveraging the hyperscaler’s established salesforce and customer relationships.
• Cloud Marketplace Listings: Your product is listed in the hyperscaler’s marketplace, making it easier for customers to discover, trial, and purchase your solution—often with flexible payment options and streamlined procurement.
• Usage-Based Revenue: Many co-sell partnerships are structured around usage-based monthly recurring revenue (MRR), aligning incentives for both parties and providing a scalable revenue stream

Revenue-Based Financing

What It Is:
Revenue-based financing (RBF) is a non-dilutive funding model where startups receive capital in exchange for a fixed percentage of future recurring revenue, typically until a set repayment cap is reached.

How It Works:

• Qualification: Best suited for SaaS startups with predictable monthly recurring revenue (MRR).
• Repayment: Instead of giving up equity or board control, you repay the advance as a percentage of your monthly revenue, making payments flexible and aligned with your cash flow.
• Speed: RBF is often faster to secure than traditional equity rounds, with less due diligence and fewer covenants.

Why It’s Attractive:

• No Equity Dilution: Founders retain ownership and control.
• Flexible Repayment: Payments scale with revenue, reducing pressure during slow periods.
• Bridge to Larger Rounds: RBF can provide growth capital between equity rounds or as a supplement to other funding channels.

Use Cases:

• Scaling without giving up board seats or ownership.
• Funding sales and marketing to accelerate ARR.
• Bridging cash flow gaps before a larger VC round.

Government Grants & Incentives

What They Are:
Government grants and incentives are non-dilutive funding sources provided by national or regional agencies to support R&D, commercialization, and pilot deployments—especially in sectors like cybersecurity and critical infrastructure.

How They Work:

• Eligibility: Startups may qualify based on innovation, market impact, or alignment with national security or economic priorities.
• Funding Scope: Grants can cover technology development, proof-of-concept projects, commercialization, and even international expansion.
• Non-Dilutive: Unlike VC or RBF, grants do not require equity or repayments (unless terms are breached).

Why Pursue Grants:

• Reduce Burn: Grants supplement private capital, extending runway and reducing reliance on dilutive funding.
• Validation: Winning competitive grants signals credibility to investors and customers.
• Pilot Opportunities: Grants often come with access to public sector pilots or reference customers, accelerating market entry.

Examples:

• National programs in Asia-Pacific supporting cloud and network security R&D.
• US Department of Homeland Security grants for cybersecurity innovation.
• EU Horizon Europe grants for network security and digital resilience.

Post-Raise Priorities: Scaling for Growth and the Next Round

Scaling Go-to-Market

• Expand your sales team and invest in channel partnerships.
• Double down on customer success to drive retention and expansion.
• Leverage co-selling and integrations with hyperscalers and ecosystem partners.

Product Development

• Accelerate roadmap execution for new features, integrations, and compliance modules.
• Invest in automation and AI to maintain technical differentiation.
• Prioritize security certifications and third-party audits.

Operational Excellence

• Monitor burn and runway to ensure at least 18–24 months of capital.
• Implement robust financial controls and forecasting.
• Prepare for due diligence by maintaining a clean data room and tracking KPIs.

Preparing for Series B and Beyond

• Set clear milestones: ARR, customer count, expansion into new geographies or verticals.
• Build relationships with later-stage investors early.
• Document repeatable sales and onboarding processes.

Case Studies: How Top Cloud & Network Security Startups Raised Capital in 2025

Cybaverse (Cloud Security, UK)

Overview:
Cybaverse, founded in 2018 by Oliver Spence and Gemma Blake, has evolved from a boutique cybersecurity consultancy into a leading Managed Security Service Provider (MSSP) and SaaS innovator for SMEs. Their flagship product, Cybaverse AI, offers a comprehensive platform for penetration testing, compliance, and proactive security management, designed to simplify cybersecurity for small and medium-sized businesses.

Funding Round:
In October 2024, Cybaverse secured £1.1 million (approx. $1.4 million/€1.3 million) in seed funding. This round was led by the FSE Group—focused on market-gap funding for high-growth UK businesses—alongside VC Haatch, Founder & Lightning, and several business angels, including the University of Sussex Business Angels group.

What Attracted Investors:

• Vision for SME Security: Cybaverse’s mission to make advanced cybersecurity accessible and manageable for SMEs resonated with investors, who saw a large, underserved market.
• Cloud-Native SaaS Platform: The Cybaverse AI platform provides continuous, proactive security monitoring, making cybersecurity management efficient and less resource-intensive for clients.
• Compliance & Integration: The platform’s focus on compliance (a top SME pain point) and its ability to integrate with major cloud providers made it highly relevant in a regulatory-driven market.
• Client Base: Notable early clients included ConnectedHealth, Crowdcube, Funding Loop, and Orbus Software, demonstrating traction and market fit.
• Leadership Expansion: The funding round coincided with the appointment of three industry veterans—Andreas Wuchner (Chairman, ex-Deutsche Bank/UBS/HP), Juliette Hudson (CTO, ex-Kroll/Bupa/Symantec), and Nicola Hartland (Non-Executive Director, ex-cyber/tech leader), bringing deep expertise and credibility to the team.

Use of Funds:
The capital is being used to accelerate product development, expand the team, and further enhance the Cybaverse AI platform. The leadership hires are expected to drive growth, innovation, and market reach as the company scales.

Investor Perspective:
Investors were impressed by Cybaverse’s clear vision, strong early traction, and commitment to solving real-world SME security challenges with scalable, cloud-native technology. The combination of a robust SaaS platform, regulatory focus, and a strengthened leadership team positioned Cybaverse as a promising player in the UK and European cybersecurity landscape.

Nillion (Decentralized Security, Switzerland)

Overview:
Nillion is pioneering decentralized security and privacy architectures, addressing the growing need for secure data sharing and computation in multi-cloud and distributed environments.

Funding Round:
In 2025, Nillion closed a $25 million venture round. The round’s success was underpinned by their unique approach to decentralized data privacy, enabling secure computation without exposing raw data.

What Attracted Investors:

• Regulatory Alignment: Nillion’s privacy-by-design architecture helps clients comply with stringent data protection regulations (GDPR, etc.).
• Hyperscaler Partnerships: Strategic collaborations with major cloud providers (hyperscalers) validated their technology and opened enterprise sales channels.
• Technical Differentiation: Their decentralized approach was seen as a breakthrough in secure multi-party computation, a hot area for both cloud security and privacy-focused investors.

Use of Funds:
Nillion is using the capital to scale its platform, expand its engineering team, and deepen integrations with cloud and enterprise partners.

Cynomi (Automated vCISO, Israel)

Overview:
Cynomi offers an automated virtual Chief Information Security Officer (vCISO) platform, targeting SMBs and managed security service providers (MSSPs) that lack in-house security leadership.

Funding Round:
In April 2025, Cynomi closed a $37 million Series B round, co-led by top-tier VCs with participation from existing investors.

What Attracted Investors:

• SMB & MSSP Focus: Cynomi’s platform addresses a massive market of SMBs and MSPs seeking affordable, automated security leadership.
• ARR Growth: The company demonstrated rapid ARR growth and strong customer expansion, with high pilot-to-paid conversion rates.
• Channel Partnerships: Strategic alliances with MSSPs and IT service providers enabled scalable distribution and recurring revenue.

Use of Funds:
Cynomi is investing in product development, expanding its sales and partnership teams, and accelerating its go-to-market strategy in North America and Europe.

Endor Labs (AppSec, US)

Overview:
Endor Labs specializes in application security for open-source and AI-generated code, helping organizations manage risk in modern software supply chains.

Funding Round:
In 2025, Endor Labs raised $93 million in a Series B round led by DFJ Growth.

What Attracted Investors:

• Open-Source & AI Code Security: Endor Labs is positioned at the intersection of two major trends—open-source adoption and AI code generation—making its platform highly relevant for modern DevSecOps teams.
• Major Product Launches: The company’s rapid product innovation and ability to serve both enterprises and cloud-native startups set it apart.
• Aggressive Scaling: With strong revenue growth and marquee customer wins, Endor Labs is poised for global expansion.

Use of Funds:
The funding is being used to accelerate R&D, expand go-to-market operations, and scale internationally.

Insights for Founders

These case studies highlight several key themes for raising capital in cloud and network security:

• Clear market focus and technical differentiation are essential for attracting both VC and strategic investors.
• Strong leadership teams with industry veterans can instill investor confidence and accelerate growth.
• Demonstrated traction—whether through enterprise clients, channel partnerships, or regulatory alignment—remains a critical factor.
• Strategic partnerships, especially with hyperscalers or MSSPs, can open doors to funding, distribution, and validation.

Cybaverse’s journey, in particular, shows how a compelling SME-focused vision, a robust SaaS platform, regulatory relevance, and a world-class team can unlock early-stage capital and set the stage for rapid growth.

Conclusion

Raising capital for a cloud or network security startup in 2025 requires more than a disruptive product, it demands a deep understanding of investor expectations, market benchmarks, and the funding ecosystem. By focusing on recurring revenue, rapid growth, and enterprise traction, and by leveraging alternative funding channels, founders can maximize their chances of success. As the sector continues to evolve, staying agile, data-driven, and strategically networked will be the keys to securing capital and scaling to market leadership.

Ready to secure the funding your cloud and network security startup needs to thrive in 2025? Don’t navigate the complex investment landscape alone. With our Fundraising Assistance service, you’ll get personalized guidance to connect with the right investors, craft a compelling pitch, and confidently close your next round.

Key Takeaways

• Cloud and network security remain top investment priorities in 2025, with high ARR multiples and strong VC, CVC, and PE activity.
• Recurring revenue, rapid growth, and enterprise traction are essential for successful fundraising.
• Valuations are driven by growth rate, retention, and strategic fit—not just topline revenue.
• Alternative funding channels (hyperscaler co-selling, revenue-based financing, government grants) offer flexibility and strategic leverage.
• Post-raise, focus on scaling GTM, product, and operational excellence to set up your next round.