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Editor鈥檚 note: This is Mergers & Money, a monthly column by Senior Reporter Chris Metinko that covers dealmaking in the enterprise tech space.

Last year proved there is significant public investor appetite for tech IPOs; from to to , investors welcomed both consumer- and enterprise-facing innovation.

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However, the IPO floodgates seemed well boarded when it came to cybersecurity. and were the only venture-backed cybersecurity firms to hit the public market last year.

So what might 2021 look like for cyber IPOs?

This week saw the Nasdaq debut of Florida-based awareness training company , which saw shares soar in early trading. seems likely to be first U.K. offering out of the gate after the detection and response firm announced its intention to go public on the .

That followed a in late February that Mountain View, California-based AI endpoint security provider was preparing for an initial public offering later this year that could value it at more than $10 billion. Just last November, the company closed a $267 million Series F that valued the company at $3 billion 鈥� tripling its valuation from just nine months prior.

However, those who enjoy watching the market should get familiar with some other names 鈥� like Kirkland, Washington-based 鈥� that are likely eyeing the possibility of taking the public market plunge, both investors and advisers say.

“In addition to KnowBe4, Darktrace, Tanium and SentinelOne, we continue to keep a close eye on the IPO pipeline for companies such as , , and possibly even 鈥� although they’re most likely on a late-2022 time horizon,鈥� said , founding and managing director of San Francisco-based financial advisory firm .

SentinelOne and Tanium are interesting since they could mark a return to the IPO landscape for the endpoint market. Competitor undertook its IPO in June 2019 and was one of the most successful cyber offerings ever 鈥� watching its stock pop and nearly double on its first day of trading 鈥� raising more than $610 million at an initial valuation of about $6.7 billion.

However, endpoint security and management is not the only sector that could whet investors appetites.

Securing the cloud

鈥淐loud security is still a sector to watch given the strong performance of companies like in the public markets, coupled with the numerous $100 million-plus funding rounds we’ve seen in the private markets,鈥� Boukouris said.

, a venture partner at , agreed cloud security could strike a chord with public investors, as seemingly every company has accelerated its adoption as workforces become more remote. Digital identity and authentication also has become popular 鈥� as illustrated by $6.5 billion stock deal for Bellevue, Washington-based last month 鈥� he added.

While not all these companies will go public, Padval said he鈥檇 keep an eye on several as IPO candidates, including Tanium, cloud security developer Netskope, open-source security company , security operations provider , data security analytics company , and fraud detection platform .

Padval said he believes the reason for the lack of cybersecurity IPOs has many facets. First, companies need revenue approaching $100 million annually 鈥� or ARR in that range 鈥� and be sure they can present a good growth rate to investors for the ensuing five to six quarters after going public. Darktrace, for example, in its filing to go public reported revenue of $199.1 million for the year ended last June 20 鈥� that鈥檚 a 45 percent increase from $137 million in the same period a year earlier.

There also are so many predictability issues entailed with going public that some shy away 鈥� and that doesn鈥檛 even include the cost.

鈥淚t鈥檚 pretty expensive to go public,鈥� he said. 鈥漇o why do you need the scrutiny?鈥�

Growth by acquisition

Cybersecurity companies 鈥� certainly those that are acquisitive 鈥� could eye the public markets, however. Going public gives companies more financing options, especially in the sense of offering stock to make acquisitions, and dealmaking is popular in cyber with 70 deals done last year alone, according to a .

Nevertheless, valuations likely will play the deciding role. Many of the companies mentioned were able to raise large private rounds in the last couple of years, and valuations and funding in cyber is hitting all-time highs.

鈥淒uring the pandemic, multiples were just ludicrous,鈥� Padval said. 鈥淲hen you look at some of the software companies, they are really good companies 鈥� great companies that are amazingly strong 鈥� but the multiples are still ridiculous.鈥�

With multiples for some cybersecurity companies hitting 50x, 75x and even 300x, it may just make economic sense to eschew the public markets and stay private as long as one can 鈥� following in the footsteps of companies like Uber and .

鈥淚f you can raise private money, maybe you just stay private,鈥� Padval added.

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