An article at Venturebeat suggests that venture capital may be failing security technology ventures due to disappointing results from previous investments and a sinking of demand due to the recession. Generally considered somewhat insulated from a recession, security spending is down by key customers like financials services and subsequently by VC's.
"But VC investment into security software firms has steadily fallen from $893 million into 122 deals in 2004 to $564 million in 86 deals in 2008. In the first six months of 2009, VCs have put $94 million into 19 deals, according to the National Venture Capital Association. The last major security software IPO was ArcSight, which raised $50 million in February, 2008."
The article also points to a recent speech by Deputy Under Secretary of Defense Robert Lenz, who laid out Government needs in security development:
"On the high level, he believes that the entire Internet infrastructure should move to the more secure DNSSEC and IPv6 technologies — both of which are better and more secure ways to anchor the Internet. He also believes that we’ll get a big payoff from investments in automating security, reducing anonymity, better biometrics, instant damage assessments, and better consumer awareness of the risks of unsafe computing."