Upwind raises $400M after walking away from Datadog offer

Upwind, a four-year-old San Francisco-based startup that utilizes artificial intelligence to secure cloud infrastructure, has successfully raised a $400 million Series C funding round, pushing its valuation to $3.8 billion. The financing was led by Bessemer Venture Partners, with participation from existing backers Greylock Partners and Craft Ventures. This new capital comes just nine months after the company closed its previous $250 million round at a $1.5 billion valuation.

The fresh funding nearly collapsed due to an acquisition attempt by Datadog, a publicly traded observability software provider. According to a source familiar with the matter, Datadog attempted to acquire the company but failed to offer a premium above the $3.8 billion valuation established by venture capital investors, prompting Upwind to reject the bid and remain independent.

Amid surging AI-driven cybersecurity threats, Upwind has experienced rapid growth, consistently adding between $20 million and $30 million in annualized recurring revenue (ARR) each quarter. The startup is projected to finish the year with roughly $90 million in ARR, meaning VCs and Datadog valued the firm at more than 40 times its forecast ARR. This multiple remains well below the 80x ARR fetched by another fast-growing security startup, Cyera, earlier this year.

Stock photo for illustration only, not from the actual event

Upwind was founded by Amiram Shachar, who previously sold his cloud spend management startup, Spot.io, to NetApp for $450 million. The company employs what it terms "runtime" security, a method that detects and remediates attacks and vulnerabilities in active services in real time, and it continues to attract strong acquisition interest from the market.

Source: TechCrunch