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Upwind raises $400M after walking away from Datadog acquisition offer

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Upwind raises $400M after walking away from Datadog acquisition offer

Upwind, a San Francisco startup that uses AI to secure cloud infrastructure, has raised a $400 million Series C round at a $3.8 billion valuation led by Bessemer Venture Partners, with participation from existing backers including Greylock Partners and Craft Ventures.

The round comes nine months after Upwind closed its previous $250 million financing at a $1.5 billion valuation.

The fresh funding, which has been in the works for months, nearly fell apart after Datadog attempted to buy the company, according to a person familiar with Upwind. Datadog is a publicly traded company that sells tools for monitoring how software runs, known as observability. It didn’t offer a premium above the $3.8 billion valuation set by venture capital investors, the person said, so Upwind decided to stay independent.

Four-year-old Upwind has grown rapidly 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 Upwind’s financials. That means that VCs and Datadog valued the startup at more than 40 times its forecast ARR, a common yardstick for pricing software companies. The high multiple is also well below the 80x ARR fetched by Cyera, another fast-growing cybersecurity startup, according to TechCrunch reporting from earlier this year.

Cybersecurity is poised to be the third big wave of AI software that companies will pay for after AI coding tools and customer support, Theory Ventures general partner Tomasz Tunguz recently wrote in his widely read blog.


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