AI-driven cyberthreats spark revenue, funding surge for cybersecurity startups

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As cyberattacks become more sophisticated with the help of artificial intelligence (AI), cybersecurity startups expect revenue to surge as demand from enterprises increases.

Experts said generative AI has dramatically reduced the cost and complexity of cyberattacks by automating phishing campaigns, discovering software vulnerabilities and creating convincing deepfakes at scale.

Mitigata, which raised $15 million in a Series B round led by Bessemer Venture Partners (BVP) with participation from Nexus Venture Partners, Titan Capital and WEH Ventures, said it expects its revenue to grow to ₹300 crore in FY27 from ₹30 crore in FY26.

“AI has made cyberattacks faster, cheaper and more scalable, which is driving demand for cybersecurity,” said Mohit Anand, co-founder of Mitigata. “At the same time, compliance requirements from global enterprises are trickling down to smaller businesses and we're seeing even first-time buyers invest in cybersecurity products and cyber insurance. That's why the sector is seeing strong momentum today.”

SecureBlink, whose AI-powered platform scans web applications and the software interfaces (APIs) that connect them for security vulnerabilities, said demand has grown by 45% since July last year.

“The attack surface is expanding. While attackers are using AI to launch more sophisticated attacks, we are using AI to defend organizations by proactively identifying vulnerabilities across applications, APIs and AI agents before they can be exploited,” said Sonal Khanna, co-founder of SecureBlink.

Global breaches have become increasingly common as companies deploy AI without securing it properly. In February, Codeway’s Chat & Ask AI app leaked 300 million messages from 25 million users due to a back-end misconfiguration. Similarly, an internal AI agent at Meta triggered an internal leak to employees in February.

In June, ransomware group World Leaks allegedly leaked over 200,000 files stolen from Tata Electronics, including purported confidential documents related to Apple and Tesla, after the company acknowledged a cybersecurity incident, according to Reuters. World Leaks posted a huge cache of files related to India's largest nuclear plant on the dark web, information it labelled as from the Reliance Group, Reuters reported on Wednesday.

Although companies treat cybersecurity as an imperative, most don’t have the right technology or policies in place, giving startups a wedge to scale their businesses. A March SANS (SysAdmin, Audit, Network, Security) Institute study found only 21% of the 1,000 organizations polled have a comprehensive AI security framework in place, while 7% have no AI policy at all.

“A year ago, most cybersecurity decks were generic ‘AI-powered threat detection’ pitches competing on the same crowded security operations centre-tooling thesis. Today, the sharper founders are picking a specific, underserved wedge, securing AI agents rather than securing humans, or building for a regulatory mandate that’s 12-18 months ahead,” said Abhishek Srivastav, general partner at early-stage VC Kae Capital.

With the changing nature of cybersecurity in the face of AI, deal-making has shifted. There were 17 funding rounds in H1 2026, compared with only three in H1 2025, according to Venture Intelligence. Funding, too, almost doubled to $89 million from $47 million in this period.

Seven of the top 10 deals in the sector in 2025 went to companies at a Series A level. So far this year, five deals went to companies at Series B and beyond, while the rest went to seed-stage companies, according to Tracxn. It’s indicative of investors not just backing companies that have been able to find scale, but also new entrants.

The growing demand also aligns with the government's push to strengthen India's cybersecurity capabilities. On 13 July, ministry of electronics and information technology secretary S. Krishnan stressed t...