Cyera Acquires Trail Security for $162M as AI Fuels Cybersecurity M&A Surge

Cyera, a cybersecurity company, is acquiring the data loss prevention startup Trail Security for $162 million. This deal highlights how artificial intelligence (AI) is accelerating the need for growth through mergers and acquisitions (M&A).

Trail Security, an Israel-based firm founded in 2023, has operated under the radar since its inception. The startup focuses on data loss prevention technologies, which protect sensitive information from cyberattacks. Before the acquisition, Trail Security raised $35 million from investors such as Lightspeed Ventures, CRV, and Cyberstarts.

Yotam Segev, Cyera’s co-founder and CEO, noted that AI is intensifying the threat of cyberattacks, making M&A crucial for keeping pace with industry demands. He explained that M&A enables access to greater engineering capabilities. “Customers in the cybersecurity space today are looking for comprehensive platforms, and we aim to solve not just yesterday’s challenges but continue growing,” Segev added.

Founded in 2021, Cyera utilizes AI to help companies manage their data infrastructure by providing tools to visualize, track, and protect where data is stored, accessed, and generated. The New York-based company recently tripled its valuation to $1.4 billion after raising $300 million in a Series C funding round in April, less than a year after its previous financing.

This acquisition occurs during limited exit opportunities, including startup-to-startup M&A activity. According to PitchBook, 78 acquisitions have been completed this year, amounting to $2.8 billion in deals where startups were sold to other VC-backed companies. The broader VC exit market hit a five-quarter low in Q3, based on PitchBook-NVCA Venture Monitor data.

Despite this, cybersecurity exits are beginning to show signs of recovery. In September, Mastercard acquired Recorded Future, a threat intelligence platform, for $2.65 billion, resulting in significant returns for investor Insight Partners. Optimism in cybersecurity remains high, even after a proposed deal between Google and cloud security company Wiz fell through in July.