Only $18.5 billion in venture capital financing were received by cybersecurity startups in 2022, compared with $30.3 billion in 2021, reports The Record, a news site by cybersecurity firm Recorded Future. Despite the decline, which was prompted by weakening valuations of publicly traded cybersecurity firms during the last six months of 2022, overall VC financing last year was still the second-highest on record, according to a report from Momentum Cyber. Identity and access management firms, including Beyond Identity, Semperis, and 1Password, received over $3.1 billion in investments, while more than $2 billion were invested to compliance and threat intelligence segments. Moreover, reduced VC investment has not hindered budget increases for security teams. Meanwhile, cybersecurity mergers and acquisitions increased from $80.9 billion in 2021 to $119.8 billion last year. "I expect to see an increase in overall M&A activity, but at lower valuations than what we saw in 2022. Additionally, cybersecurity spending and budgets continue to rise somewhere in the neighborhood of 7-10%, even in the midst of the recession," said Momentum Cyber founder Dino Boukouris.