Why Startup Cyber Funding Boom Creates Execution Risks

Agentic AI , Artificial Intelligence & Machine Learning , Events Why Startup Cyber Funding Boom Creates Execution Risks Rain Capital's Lefort on Overcapitalization and Cybersecurity's Barbell Effect Michael Novinson (MichaelNovinson) • March 28, 2026     Share Post Share Credit Eligible Get Permission Sidra Ahmed Lefort, venture partner, Rain Capital Cybersecurity funding hit all-time highs in 2025, rivaling the 2021 boom, said Sidra Ahmed Lefort, venture partner at Rain Capital. A "barbell effect" has taken hold, with capital concentrating at the earliest and latest stages while squeezing the Series B and C middle, which is creating serious execution risk for startups. See Also: Taming the Rise of Shadow AI Agents Overcapitalization blunts the urgency that drives good decision-making. When startups have more cash than they need, the pressure to prioritize fades. "Cushions are meant to be comfortable; they're not meant to be making you competitive," Lefort said. "These companies now have to figure out how to ruthlessly prioritize, which is very hard to do with the amount of capital that they have." In this video interview with Information Security Media Group at RSAC Conference 2026, Lefort also discussed: How M&As, not IPOs, remain the dominant cybersecurity exit route, with infrastructure companies widening the acquirer pool; Why cash is not a moat, especially as artificial intelligence erodes product differentiation and lowers switching costs; Why second-time founders command outsized capital and credibility in the current funding environment. Lefort focuses on cybersecurity opportunities at Rain Capital, drawing on prior experience building Munich Re Ventures' cybersecurity practice globally. She identifies emerging companies, evaluates market potential and helps shape investment strategy through extensive expertise in cyber and enterprise technology investing.