July 16, 2024
Empirical Analysis: Blockchain Emerges as Top Information Security Startup Investment
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Empirical Analysis: Blockchain Emerges as Top Information Security Startup Investment

In a groundbreaking empirical study conducted by a team of Swiss researchers, blockchain emerges as the top performer among information security startup investments. Under the auspices of Switzerland’s Cyber-Defence Campus, the study titled “Measuring the performance of investments in information security startups: An empirical analysis by cybersecurity sectors using Crunchbase data,” provides insights into the investment landscape within the cybersecurity domain.

The study, which ranks 19 information security startup sectors spanning from artificial intelligence to spam filtering, underscores the remarkable performance of blockchain ventures. According to the researchers, investments in blockchain security startups yielded the highest expected annual arithmetic (AAR) and log returns, standing at 177.27% and 105.42% respectively, aligning closely with the performance of cryptocurrencies over the sample period.

Lead researcher stated, “Simply put, investments in blockchain security startups had higher returns than artificial intelligence (AI), machine learning, cloud, and other sectors by a significant margin. AI was second, with expected annualized arithmetic returns of 67.25%.”

It’s important to note that these figures pertain specifically to the security sector within information technology startups and do not encompass broader AI and tech sectors, which include non-security hardware and software products and services.

Moreover, blockchain not only outperformed other sectors in terms of returns but also exhibited remarkable speed in reaching milestones. On average, blockchain startups transitioned from their first recorded funding round to their initial public offering (IPO) in less than three and a half years. In contrast, startups in other sectors averaged between four and seven years, with e-signature startups taking as long as 10 years to reach IPO status.

The study relied on Crunchbase data, which provided extensive information on funding rounds, albeit with some gaps in IPO data. To address this limitation, the researchers employed a machine-learning approach to compensate for missing entries.

The researchers also note that the performance of blockchain security startups is likely driven by investors’ interest in cryptocurrencies. However, it’s essential to acknowledge that the data analyzed in the study only covers the period from 2010 to 2022. As such, the transformative developments in blockchain and crypto post-COVID, which have been highlighted in other studies, are not included in this analysis.

This study offers valuable insights into the investment dynamics within the cybersecurity domain, highlighting blockchain’s prowess as a lucrative sector for investors seeking high returns and expedited growth trajectories.

Image: Wallpapers.com

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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