PitchBook noted that Q3 2025 cybersecurity investment reached a multiyear low amid shifting enterprise security priorities. The research report from PitchBook also mentioned that Q3 cybersecurity venture capital activity fell sharply, with deal value dropping to $2.6 billion across 158 transactions. This was the lowest quarterly total since Q3 2024 and the “fewest deals recorded since 2017.” Identity and access management led the quarter at “$914.6 million, significantly above its quarterly median.”
The research report further noted that the segment’s rebound contrasted with Q2, when both deal value and counts fell by more than “half from Q1 due to concentration in a small number of large, late-stage rounds tied to enterprise zero-trust initiatives and regulatory upgrade cycles.”
PitchBook further revealed in the report that security operations ranked second at “$670 million across 46 transactions, marking the highest deal activity since Q3 2024.”
This growth is driven by the accelerating “adoption of AI, rising ransomware frequency, and the implementation of regulatory frameworks, including DORA, CRA, and data sovereignty.”
Data security contracted from “$1.5 billion across 34 transactions in Q2 to $361.5 million across 20 deals in Q3 as no comparable megarounds occurred.”
Exit activity moved in the opposite direction, rising from “$0.2 billion in Q2 to $8 billion across 36 transactions.”
Netskope accounted for most of that value with “a $6.35 billion public listing.”
According to the research report, consolidation has now “continued to dominate, including Palo Alto Networks’ $675 million acquisition of Protect AI to expand its security posture across the model development lifecycle and integrate AI supply chain protection into its platform, and NVIDIA’s $320 million acquisition of Gretel to support delivery of synthetic and privacy-safe datasets that accelerate model training and enterprise AI adoption.”
As noted in the PitchBook report, median VC pre-money valuations increased from “$27.6 million to $48 million between 2024 and 2025, while early-stage deal sizes rose and exceeded the median valuations of later-stage VC deals.”
PitchBook concluded in their extensive research report that policy momentum from expanding CISA program budgets, NIST AI risk management standards, and DORA implementation is now expected “to reinforce enterprise security spend and accelerate the adoption of AI-oriented cybersecurity solutions.”