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By Glenn Rieger, NewSpring

From managing healthcare records and finances to how we do our shopping, innovative technologies have made our lives easier by giving us the freedom to access almost anything at the touch of a button. But this on-demand convenience often comes with increased security risk.

With so much of our personal information being transmitted daily, we have become more susceptible to cyberattacks. In fact, cyberattacks have become the fastest growing crime in the U.S. with cybersecurity spending expected to exceed $1 trillion through 2021, according to a report by Cybersecurity Ventures.

When the National Association of Corporate Directors asked board members to identify trends most affecting their companies over the next 12 months, “cybersecurity threats” were cited more frequently than even “political uncertainty in the United States” or “technology disruption” — a revealing statistic, given the state of current events.

As a result, the mounting need for cybersecurity solutions has opened the door for thousands of new companies touting the “best” and “most effective” security platforms.

As growth-equity investors, how do we determine the best opportunity within this crowded market?

In the cybersecurity sector, a handful of well-established megacompanies make up the tip of the iceberg. We at NewSpring, however, see greater opportunity just beneath the surface.

We pursue growth-oriented cybersecurity companies that are multifaceted, have revenue- and service-expansion potential, and will be able to deliver attractive exit multiples.

Beyond these criteria, we believe it’s crucial to identify companies with innovative, differentiated product offerings that provide effective solutions to the problems facing their target customers, whether in enterprise or mid-market sectors.

A little more than a year ago, I attended the RSA Conference in San Francisco, where it’s easy to become overwhelmed by the myriad cybersecurity solutions on the market.

The majority of these companies are single-niche companies, focused on one specific area, such as endpoint protection, network security, cloud security or threat intelligence.

If you are a company looking to protect yourself against cyberattacks, you would need to bundle several of these companies to get a full suite of services.

And with cyberattacks appearing in a variety of shapes and sizes, you need a wide range of security solutions. This presents an opportunity for those who can fill this void.

For example, a few years ago we invested in LookingGlass Cyber Solutions, which provides intelligence-driven security by delivering unified threat protection to global enterprises and government agencies.

LookingGlass’s end-to-end portfolio, backed by a global team of security analysts, addresses a full spectrum of cybersecurity risks by rapidly analyzing structured and unstructured data gathered from its customers’ infrastructures and correlating this information in real-time with security trends the company monitors across the wider internet.

This view of threats offers earlier recognition and mitigation of cyberrisks present in business operations, supply chains and other third parties.

LookingGlass provides not only the technology required to combat sophisticated cyberattacks, but also information-security, brand-security or physical-security monitoring as a service to its customers and partners.

When we were evaluating the company’s offering, it had recently acquired two companies and was negotiating a third. LookingGlass’s commitment to a rollup strategy enabled it to offer multidimensional cybersecurity solutions, which played an important role in our decision to invest.

As technology advances and consumers’ appetites for customization and convenience continue to grow, the need for cybersecurity will become even more prevalent.

While healthcare and fintech will continue to garner most of the headlines, other industries such as automotive, logistics and smart home technology will also spur new opportunities.

The cybersecurity industry has only just begun to scratch the surface and we are optimistic about the exciting new investment opportunities this sector will have to offer.

Glenn Rieger is general partner at NewSpring and NewSpring Growth, which partners with management of industry-transforming, high-growth companies across the business-services, enabling-technology and IT sectors. Glenn can be reached at [email protected].