Startups focused on cybersecurity and privacy worldwide brought in $6.8 billion during the third quarter of 2026, marking a roughly 50% jump from the previous quarter, according to a new report from Crunchbase. The quarterly total matched the highest level seen in years, driven overwhelmingly by artificial intelligence companies working on identity security. The surge came not from a higher number of deals, but from much larger individual funding rounds.
The increase in capital stemmed entirely from bigger check sizes rather than more transactions, according to the Crunchbase analysis. Deal counts actually fell quarter-over-quarter across every stage of funding. At least 18 companies operating at the crossroads of AI and cybersecurity each closed rounds worth $100 million or more during the quarter. Enterprise identity security firm Keyfactor led all recipients by far, securing $1 billion in a July growth round headed by Summit Partners. The Ohio-based company, founded in 2001, has pulled in most of its venture backing over the past decade and recently shifted its focus toward AI. Dallas startup Island and New York's Cyera tied for second place, each raising $400 million in September. Island's Series F, led by Evolution Equity Partners, valued the company at $6.4 billion post-money. Cyera's round, led by Goldman Sachs Growth Equity, came just three months after a $600 million raise and set a $12 billion valuation for the enterprise data security platform.
The report notes that acquisition activity also picked up during the quarter, even as IPO markets remained relatively quiet. Visa topped the M&A landscape with its $2.4 billion purchase of anti-fraud technology company BioCatch in August, part of the payments giant's push to strengthen fraud detection and prevention tools for the age of artificial intelligence. Among private unicorns, Cyera acquired Oasis Security, an enterprise access management platform designed for AI agents, in a transaction reportedly valued near $1 billion. The quarter's only significant venture-backed public market debut came from Aura, a Boston-based consumer digital security firm that completed a reverse merger with Australian public company Qoria in July and renamed the combined entity.
The Crunchbase report describes the quarter as reflecting an optimistic climate for cybersecurity startup investment, attributing the trend to persistent concerns about dangers posed by rapidly advancing AI technology. The authors point to an expanding landscape of threats that cybersecurity founders must address. The report indicates it will continue monitoring whether investment momentum sustains through the current quarter. For founders building security solutions around artificial intelligence, the expanding range of vulnerabilities translates directly into funding opportunities, even as the broader venture environment remains selective. The pattern suggests investors view AI-era threats not as temporary concerns but as structural shifts requiring major capital deployment—a bet that security infrastructure must be rebuilt rather than patched for a world where both attackers and defenders wield machine intelligence.