San Francisco-based cloud security startup Upwind has secured a massive $400 million Series C funding round, catapulting its valuation to $3.8 billion. The financing was led by Bessemer Venture Partners, with continued participation from existing backers including Greylock Partners and Craft Ventures.
This latest financial milestone arrives just nine months after Upwind closed its previous financing round, a $250 million investment in January that valued the company at $1.5 billion. The rapid succession of funding rounds highlights the intense investor appetite for advanced cloud infrastructure protection, particularly as organizations grapple with a shifting threat landscape increasingly complicated by artificial intelligence.
However, the path to closing this fresh capital was not entirely straightforward. According to a person familiar with Upwind’s operations, the round had been in the works for months and nearly fell apart due to a surprise acquisition attempt. Datadog, a publicly traded titan in the software observability space that sells tools for monitoring how software runs, moved to acquire the four-year-old startup.
Ultimately, the acquisition talks broke down over valuation. Datadog failed to offer a premium above the $3.8 billion price tag already established by venture capital investors, prompting Upwind’s leadership to reject the buyout bid and choose to remain an independent entity.
Upwind’s explosive growth has been a primary driver behind both the hefty venture backing and Datadog’s acquisition interest. The startup has consistently added between $20 million and $30 million in annualized recurring revenue (ARR) each quarter, putting it on a trajectory to finish the year at approximately $90 million in ARR, according to an individual with knowledge of the company’s financial metrics.
Based on these figures, both the venture capitalists and Datadog evaluated the startup at more than 40 times its forecasted ARR—a standard valuation multiple used for pricing high-growth software enterprises. While a 40x multiple is substantial, it remains notably lower than the staggering 80x ARR multiple commanded by Cyera, another rapidly scaling cybersecurity startup that drew massive market attention earlier this year.
The broader venture capital ecosystem views cybersecurity as the natural successor to earlier technology booms. According to Tomasz Tunguz, a general partner at Theory Ventures, cybersecurity is poised to become the third major wave of AI software that enterprises are willing to open their wallets for, following closely behind the widespread adoption of AI coding assistants and customer support automation tools.
By walking away from Datadog’s buyout offer, Upwind’s leadership is signaling profound confidence in the company’s long-term trajectory, betting that the independent enterprise will ultimately accrue a value far exceeding the $3.8 billion that was on the table. Even so, market analysts note that given the current scarcity of successful public offerings for cybersecurity companies in recent years, an eventual acquisition remains a probable long-term outcome for the startup. Industry insiders indicate that Upwind continues to attract ongoing acquisition interest from other major players in the technology sector.
Upwind was founded by Amiram Shachar, an experienced entrepreneur who previously built and sold Spot.io, a cloud spend management startup, to NetApp for $450 million. Under Shachar’s leadership, Upwind has carved out a distinct niche by focusing on what it calls "runtime" security. Unlike traditional preventative security measures that analyze code before deployment, Upwind’s platform actively monitors, alerts, and remediates attacks and vulnerabilities in active cloud services in real time.
Representatives from TechCrunch have reached out to both Upwind and Datadog for official comments regarding the funding round and the aborted acquisition talks.