Top cybersecurity VCs share how COVID-19 has changed investing

The coronavirus pandemic is, without doubt, the greatest challenge the world has faced in a generation. But the wheels of the world keep turning, albeit slower than during normal times.

But where the world has faced challenges, the cybersecurity industry remains largely unscathed. In fact, some cybersecurity businesses are doing better than ever because cybersecurity has emerged as one of the few constants we all need - even during a pandemic.

The vast majority of the global workforce is (or has been) working from home since the start of the lockdown, and the world had to quickly adjust. Tech companies pushed their technology and services to the cloud. Businesses had to shift from not just securing their office network but also preventing threats against their highly distributed employees working from their own homes. And, hackers are retooling their attacks to be coronavirus themed, making them far more likely to succeed.

All of these things - and more - need security. Or, as one investor told us: Many of these trends were already underway, but COVID-19 is an accelerant." That's helped cybersecurity firms weather the storm of this pandemic.

We spoke to a dozen cybersecurity VCs to hear their thoughts on how COVID-19 has changed the investment landscape:

• Ariel Tseitlin, Scale Venture Partners
• Shardul Shah, Index Ventures
• Theresia Gouw and Mark Kraynak, Acrew Capital
• Niloofar Razi Howe, Energy Impact Partners
• Matt Bigge, Crosslink Capital
• Sarah Guo, Greylock Partners
• Deepak Jeevankumar, Dell Technologies Capital
• Umesh Padval, Thomvest Ventures
• Saam Motamedi, Greylock Partners
• Alex Doll, Ten Eleven Ventures
• Dharmesh Thakker, Battery Ventures

Here's what they told us. (Answers have been edited for clarity.)

Ariel Tseitlin, Scale Venture Partners

Security budgets haven't been affected nearly as much as broader IT spend. We continue to see existing portfolio companies raise follow-on financings, and we continue to meet with companies for new potential investments. The big change in my criteria for new investments is that a company must be able to continue growing in the current environment. We don't know how long this downturn will last, so I don't buy into the promise of as soon as the economy recovers, growth will resume."

Shardul Shah, Index Ventures

On Microsoft's last earnings call, chief executive Satya Nadella said: As COVID-19 impacts every aspect of our work and life, we have seen two years worth of digital transformation in two months." This acceleration has actually created momentum for a number of cybersecurity businesses, which is why the best companies continue to draw significant interest from investors. I serve on the board of security firm Expel, which raised $50 million in the middle of this crisis.