Empirical analysis identifies blockchain as a high-performing information security startup investment

A group of Swiss researchers under a grant from the Swiss Cyber-Defense Campus recently published a theoretical study showing blockchain as a top performer among information security startup investments.

The study, titled “Measuring the Performance of Investments in Information Security Startups: An Existing Analysis of Cybersecurity Sectors Using Crunchbase Data,” identifies 19 information security startup sectors ranging from artificial intelligence to spam filtering.

According to the researchers:

“We find that the blockchain sector has the highest expected annual return (AAR) and log returns of 177.27% and 105.42%, respectively, in line with the performance of cryptocurrencies over the sample period.”

Simply put, investments in blockchain security startups from artificial intelligence (AI), machine learning, cloud, and other sectors have reaped huge returns by huge margins. AI was second, with expected annualized returns of 67.25%.

He noted that these figures do not represent the broader AI and technology sectors, which include non-security hardware and software products and services such as Nvidia's GPUs and OpenAI's GPT Tech.

Focusing specifically on security sector investments, blockchain is not only dominant in generating returns, but also the fastest. While blockchain startups move to an initial public offering (IPO) in less than three-and-a-half years on average from initial funding, while those in other sectors take an average of four to seven years, e-signature startups take 10.

Related: Ondo Finance eyes Treasury expansion amid crypto bull market

The study was based on Crunchbase data, which, according to the researchers, showed complete data on funding rounds but lacked a specific entry for IPOs. To compensate for the missing data, the researchers used a “machine learning technique.

The group also wrote that the performance of blockchain security startups “may be driven by investors' interest in cryptocurrencies.” Therefore, it should be mentioned that the data used in the study only covers the period from 2010 to 2022. Much of the post-Covid activity, however, does not fall within the time frame that other studies have attributed to both blockchain and crypto. This study.