Upwind Raises $400M at $3.8B Valuation After Rejecting Datadog Acquisition Offer
Upwind, a San Francisco–based startup using AI to secure cloud infrastructure, has raised a $400 million Series C round at a $3.8 billion valuation. The round was led by Bessemer Ventures, with participation from existing backers including Greylock Partners and Craft Ventures.
The funding comes nine months after Upwind closed a previous $250 million round at a $1.5 billion valuation.
Datadog Acquisition Talks Nearly Derailed the Round
The new financing, which had been in the works for months, nearly fell apart after Datadog attempted to acquire the company, according to a person familiar with Upwind. Datadog, a publicly traded observability company that sells tools for monitoring how software runs, did not offer a premium above the $3.8 billion valuation set by venture capital investors, the person said—prompting Upwind to remain independent.
Rapid Growth Driven by AI-Era Security Threats
Four-year-old Upwind has grown quickly amid rising AI-driven cybersecurity threats. The startup has been adding $20 million to $30 million in annualized recurring revenue (ARR) each quarter and is projected to end the year at roughly $90 million, according to a person familiar with its financials. That implies a valuation of more than 40 times forecast ARR—a common yardstick for pricing software companies.
The multiple is still below the roughly 80x ARR that investors assigned to Cyera, another fast-growing cybersecurity startup, earlier this year, according to TechCrunch reporting.
Cybersecurity is positioned to become the third major wave of AI software that enterprises pay for, following AI coding tools and customer support, Theory Ventures general partner Tomasz Tunguz recently wrote on his widely read blog.
Betting on Independence—and a Future Exit
By walking away from Datadog's offer, Upwind is signaling its belief that the company will ultimately be worth more than the $3.8 billion Datadog was prepared to pay. Still, given how few cybersecurity companies have gone public in recent years, an eventual sale remains the most likely outcome for the startup. Upwind continues to draw acquisition interest, according to a person familiar with the company.
Runtime Security and a Proven Founder
Upwind was founded by Amiram Shachar, who previously sold his cloud spend management startup Spot.io to NetApp for $450 million. Upwind describes its approach to thwarting threats as "runtime" security—alerting on and remediating attacks and vulnerabilities in active services in real time.
TechCrunch has reached out to both Upwind and Datadog for comment.
via TechCrunch