The “Sweet Spot” Between Two Converging Megatrends

According to a high-ranking government official, we’re currently witnessing “the greatest transfer of wealth in history.

But this transfer isn’t coming from the stock or bond market, or any other market you can think of.

It has a more shocking source:

Cybercrime

Chaos… And Opportunity

Cybercrime costs U.S. corporations an estimated $250 billion annually. Globally, the cost is closer to $1 trillion.

Those are stunning numbers. But where there’s chaos, there’s opportunity.

Today, we’ll examine this troubling trend, and look at some of the young companies that are emerging to help stem the tide.

What Is “Cybercrime”?

“Cybercrime” is any crime that involves a computer.

If someone steals your email password, or swipes files from your hard drive, that’s cybercrime.

But these aren’t the types of activities causing panic in the halls of the White House or America’s largest corporations…

Large-Scale Cyber Attacks

You see, large-scale cyber-attacks are now targeting our country’s corporations and government systems.

Earlier this summer, for example, Facebook was attacked – and shut down – by a group of hackers from China. The financial impact was measured in the millions of dollars.

Other attacks involved “breaking into” systems to steal information. Two weeks ago, a group of Russian hackers stole over 1.2 billion user names and passwords.

These aren’t isolated incidents. In 2013, an estimated 200 cyber-attacks occurred each minute.

To get a visual sense for the volume of these attacks, you can visit this fascinating website to see them in real-time »

And here you can see a recording of what happened to Facebook (the attack begins 12 seconds in) »

Counter Attack

The victims of these attacks have started gearing up to build stronger defenses.

U.S. corporations now spend an estimated $5.9 billion annually on cyber security. And beginning next year, the U.S. Government is budgeting $5.1 billion to do the same.

But to get a true handle on this growing threat, security experts estimate that annual spending will have to increase almost fivefold – to $46 billion.

Clearly, cybercrime will be an important sector over the coming years.

Next Tech Megatrend: Cyber Security

As an investor, there are many ways to play this trend.

In the public markets, stocks of companies like Symantec (NASDAQ: SYMC) have nearly doubled in the last couple of years. Continued tailwinds are expected.

But our focus here isn’t on existing technologies…

We focus on the next generation of technologies.

Early-Stage Cyber Security Companies

One example of a next-gen cyber security start-up is a mobile app called Lookout, which raised $150 million in venture capital this week.

They’ve been around for 7 years, have 50 million people using their app, and are likely on an IPO track.

Then there are two earlier-stage cyber security start-ups raising capital on OurCrowd.com, one of the platforms we cover at Crowdability:

The first company is called Convertix. Convertix provides a file protection solution that helps businesses keep their files safe, even after they’ve been transferred outside of the company computer system.

The second start-up is called Fireblade. Fireblade provides real-time website protection for enterprises. Their goal is to prevent system breaches and server attacks like the one Facebook experienced.

You can learn more about Convertix and Fireblade here and here.

Best Regards,

Wayne Mulligan
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