Global startups operating in cybersecurity and privacy raised $6.8 billion during the third quarter of 2026, according to Crunchbase data. The figure is approximately 50% higher than in the previous quarter and matches the highest quarterly total recorded in recent years.
However, the increase in funding value does not reflect a rise in the number of deals; the number of rounds declined quarter over quarter across all investment stages. This indicates that capital was directed to a greater extent toward specific companies capable of raising large rounds.
AI and Identity Security Lead the Way
AI companies captured the largest share of sector funding, with a clear focus on identity security. At least 18 companies combining AI and cybersecurity closed rounds worth $100 million or more during the quarter.
Keyfactor, an enterprise identity security provider, was the largest beneficiary after raising $1 billion in a growth round led by Summit Partners in July. The company was founded in 2001 and therefore does not traditionally belong to the startup category, but most of its venture funding came during the past decade, and its focus on AI is relatively recent.
Dallas-based Island raised $400 million in a Series F round in September led by Evolution Equity Partners, bringing its post-money valuation to $6.4 billion. The company provides tools that enable organizations to see and manage how employees and AI agents interact with applications and data.
Cyera, which operates an enterprise data security platform focused on AI agents, also received a new $400 million investment led by Goldman Sachs Growth Equity in September, just three months after raising $600 million. The latest round raised the valuation of the New York-based company to $12 billion.
Large Acquisitions Despite a Slowdown in IPOs
Activity was not limited to funding. Visa led mergers and acquisitions by purchasing fraud-prevention technology provider BioCatch for $2.4 billion in August, in a deal aimed at strengthening its ability to detect and prevent fraud as the use of AI increases.
Cyera, in turn, acquired Oasis Security, an enterprise access management platform designed for AI agents, in a deal reportedly valued at approximately $1 billion. Aura, which provides digital security services to consumers, was the only major venture-backed public offering; in July, it completed its acquisition of Australian-listed Qoria and then renamed the combined entity Aura.
What Does This Mean for the Market?
Third-quarter data shows that investors are focusing on security companies capable of addressing the identity, data, and interaction risks that arise as AI use expands. At the same time, the decline in the number of rounds means that the improvement in total funding is distributed unevenly, with its benefits tending to go to larger or more established companies.
Whether this momentum will continue in the current quarter remains an open question. The source links the positive investment environment to growing security concerns associated with the rapid advancement of AI technologies, but it does not guarantee that the same pace will continue.