Upwind, a startup based in San Francisco that leverages artificial intelligence to enhance cloud infrastructure security, has successfully secured $400 million in a Series C funding round, achieving a valuation of $3.8 billion. The funding was led by Bessemer Venture Partners, with contributions from existing investors such as Greylock Partners and Craft Ventures. This latest financing comes just nine months after Upwind completed a previous round of $250 million at a valuation of $1.5 billion. The new capital, which has been in development for several months, nearly fell through following an acquisition attempt by Datadog, as reported by an insider familiar with Upwind’s situation. Datadog, a publicly traded entity specializing in software performance monitoring tools, did not propose a premium over the $3.8 billion valuation established by venture capitalists, leading Upwind to opt for independence.
Founded four years ago, Upwind has experienced significant growth in response to increasing AI-driven cybersecurity threats. The startup has been generating an additional $20 million to $30 million in annualized recurring revenue (ARR) each quarter and is anticipated to conclude the year with approximately $90 million, according to an insider acquainted with Upwind’s financial status. This valuation indicates that both venture capitalists and Datadog appraised the startup at over 40 times its projected ARR, a typical metric for evaluating software companies. However, this multiple remains considerably lower than the 80x ARR achieved by Cyera, another rapidly expanding cybersecurity firm, as highlighted in recent reports by hinews.
Cybersecurity is expected to emerge as the third significant wave of AI software that enterprises will invest in, following AI coding tools and customer support solutions, as noted by Theory Ventures general partner Tomasz Tunguz in his widely followed blog. By declining the acquisition offer, Upwind evidently holds the belief that its value will surpass the $3.8 billion that Datadog was prepared to pay. Nevertheless, considering the limited number of cybersecurity firms that have gone public in recent years, a future sale remains the most probable scenario for the startup. Upwind continues to attract acquisition interest, according to an insider familiar with the company’s activities. The startup was established by Amiram Shachar, who previously sold his cloud spend management company, Spot.io, to NetApp for $450 million. Upwind describes its method of countering threats as “runtime” security, which involves real-time alerts and remediation of attacks and vulnerabilities in active services. Hinews has reached out to both Upwind and Datadog for comments.
