Cybolt is currently raising via preferred equity at a $140 million pre-money valuation. In comparison to other growth stage startups currently raising capital online, this valuation is extremely high. However, it is somewhat justified by Cybolt’s recent revenue. The company brought in more than $26 million in 2020, which results in a revenue-to-valuation multiple of 5x. That multiple is very reasonable for a cybersecurity software company. Balancing these factors together, Cybolt scores around average for the price metric.

The market opportunity for cybersecurity companies is large and growing rapidly. According to one source, the global industry was worth $167.1 billion in 2020. With an expected annualized growth rate of 10.9%, it should climb to $382.4 billion by 2028. That size and growth rate bode well for Cybolt’s plans to expand into the US and Europe. However, the company is currently only in the Latin America cybersecurity market. That market sector is a little more restricted, coming in at just under $13 billion in 2019. The Latin American cybersecurity market is growing at an annual rate of 13.8%, which offsets the market’s current small size. Because Cybolt is expanding from Mexico to the US and Europe, it has a massive overall market opportunity. The company’s market score is its highest across all five metrics due to this.

Mauricio Rioseco is Cybolt’s co-founder and chairman. Rioseco’s only previous employment appears to be as a managing partner for RW Consulting. While there, he focused on mergers and acquisitions, corporate finance, and providing strategic advisory services. He earned a master’s degree in business administration from the IPADE Business School in Mexico. Rioseco’s experience with mergers and acquisitions is a crucial skill set for Cybolt, as the company does not develop solutions in-house.

CEO Luis Adrian Gomez Moreno is Cobalt’s second co-founder. Prior to founding the venture, he served as the founder and CEO of ARAME, a cybersecurity company. He spent more than 15 years at that business. Moreno’s experience at ARAME gives him the necessary industry knowledge and management skills to be a fitting leader for Cybolt.

Cybolt has a large team of additional employees, all of which work on a contract basis. 

Founders Rioseco and Moreno bring a complimentary skill set of merger and acquisition expertise and cybersecurity knowledge. However, neither has any prior exits, and the company lacks advisors. Balancing these factors together, Cybolt scores just slightly above average in the team metric.

Cybolt attempts to stand out within the fragmented cybersecurity market by providing a comprehensive suite of services. In comparison to many smaller cybersecurity firms, the company is successful in setting itself apart. Through its mergers and acquisitions, Cybolt can offer a wide range of services, including forensic investigation, risk management, business resilience, and cloud security. Having all of these services available via one company is a definite advantage for many businesses. However, it would be a mistake to think that Cybolt is the only one with this strategy. Competitors with similar approaches include Palo Alto Networks, IBM, CrowdStrike, and Fortinet. Cybolt also lacks any patents to protect its various solutions — likely because its services are not developed internally — which reduces the company’s defensive moat. There also does not appear to be any other major advantages or strengths to Cybolt’s products beyond them being offered all in one place. These weaknesses result in an average differentiation score for Cybolt.

One of the strongest areas for Cybolt is performance. The company has done remarkably well in recent years as it has worked to expand its footprint. In 2019, Cybolt generated $20.6 million in revenue. This increased to $26.7 million in 2020, and management forecasts revenue of $51 million this year. The company also went from generating a net profit of $1.02 million in 2019 to $2.48 million in 2020. The company also has notable partnerships, which include BlackBerry and Microsoft, and more than 200 customers. Given Cybolt’s multiple years of profitability, the company scores very strongly in the performance metric.

The overall risk profile of Cybolt is fairly low. Only two categories of risk were elevated — time and financials. The main concern surrounding timing is related to Cybolt’s business model. Because it provides solutions to other companies, its sales cycle is naturally longer than a company that sells directly to consumers. Longer sales cycles can create risk because they often result in a company gaining customers at a slow pace. Long sales cycles also make expansion more difficult, especially when breaking into a new market sector. However, Cybolt’s impressive performance suggests it will be up to the challenge.

From a financial standpoint, Cybolt’s margins may need to be improved for the business to continue growing substantially. Comparing its 2020 revenue ($26.7 million) and cost of goods sold ($16.2 million), the company had a 39% margin. For a company that offers software-based services, that margin is not as good as investors may want it to be. 

Overall, Cybolt does not exhibit many major weaknesses. The $140 million valuation for this round is very high and may dissuade some investors. There is also always risk when a company attempts to expand into a new geographic market. While Cybolt has found success in Mexico, it is not guaranteed that the same strategy will translate to the US or European markets.

Cybolt’s performance has been very promising so far. The company has earned more than $26 million in 2020 and has been profitable for multiple years. Cybolt has a significant customer base, and its partners include the likes of Microsoft. The cybersecurity market is also large and growing rapidly, which increases Cybolt’s chances of success even more. Bringing many cybersecurity services and solutions together under one brand is likely to appeal to many businesses as it is much more convenient than having to use fragmented tools. As Cybolt expands into the US and Europe, the company could secure a significant market share.

Cybolt has designed a platform that offers a comprehensive suite of cybersecurity services. Instead of developing solutions internally, the company has grown through a merger and acquisition strategy. While currently based in Mexico, Cybolt is planning to expand into the US and Europe within the next few years. 

Cybolt’s current valuation is somewhat steep — though it is reasonable in terms of its recent revenue. The company lacks a defensive moat as it has no patents to protect its suite of services. However, Cybolt has shown significant growth and traction thus far. The company boasts more than 200 customers and many notable partnerships, including Microsoft and IBM. It has also maintained profitability for multiple years, an impressive feat for any startup. Because the US and European cybersecurity markets are even larger than Latin America’s, it seems likely Cybolt will continue to grow and expand. Due to these factors, Cybolt is a Deal to Watch at this time. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Daniel Jones.