A team of Swiss researchers, under grant from Switzerland’s Cyber-Defence Campus, recently published an empirical study showing blockchain as the top performer among information security startup investments. 

The study, titled “Measuring the performance of investments in information security startups: An empirical analysis by cybersecurity sectors using Crunchbase data,” identifies and ranks 19 information security startup sectors ranging from artificial intelligence to spam filtering.

According to the researchers:

“We find the blockchain sector to have the highest expected annual arithmetic (AAR) and log returns at 177.27% and 105.42%, respectively, consistent with the performance of cryptocurrencies over the sample period.”

Simply put, investments in blockchain security startups had higher returns than AI, machine learning, cloud, and other sectors by a significant margin. Artificial intelligence was second with expected annualized arithmetic returns of 67.25%.

It bears mention that these figures don’t represent the broader AI and tech 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, not only does blockchain take the top spot for returns, it’s also the fastest. Whereas blockchain startups on average went from first recorded funding round to IPO in less than three and a half years, those in other sectors averaged between four and seven years with E-signature startups taking 10.

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The study relied on Crunchbase data which, according to the researchers, featured exhaustive data on funding rounds but lacked some entries for IPO. To compensate for the missing data, the researchers “used a machine learning approach.”

The team also writes that blockchain security startup performance “is likely to be driven by investors’ interest in cryptocurrencies.” Thus, it bears mention that the data used in the study only covered periods from 2010 - 2022. Much of the post COVID activity, a period other studies have referred to as transformative for both blockchain and crypto, would therefore not be included in this study.