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By: Ilana Siyance
Cybersecurity firm Wiz had been in advanced talks to be purchased by Google’s parent company Alphabet Inc. As reported by Business Insider, Wiz rejected the $23 billion buyout offer, saying it will rather pursue its original plan for an Initial public offering.
“I know the last week has been intense, with the buzz about a potential acquisition. While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz,” Wiz co-founder and CEO Assaf Rappaport wrote in a memo. “Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice.” The memo did not name Google or the parent company by name, and neither company had confirmed the talks.
Rappaport said in the same memo that the company will focus on an IPO, and on achieving $1 billion in annual recurring revenue. Rappaport had been targeting an IPO as recently as May, then getting sidelined in talks with Alphabet. Rappaport earlier had said that, “Regarding a potential IPO, we are not rushing into it — we have previously indicated that we would move ahead once we reach $1 billion ARR.”
Wiz, an Israeli-owned New York-based cloud security startup, was co-founded in January 2020 by Rappaport, Yinon Costica, Ami Luttwak and Roy Reznik. The company analyzes computing infrastructure hosted in AWS, Azure, GCP, OCI, and Kubernetes for combinations of risk factors. Powered by artificial intelligence, it aims to assist companies in identifying and removing critical risks on cloud platforms. Impressively, the company had reported $100 million in annual recurring revenue after just 18 months in business.
In 2023, it reported $350 million in annual recurring revenue. Earlier this year, Wiz purchased Gem Security, a cloud detection and response company. It also inked a letter of intent to purchase Lacework, a cybersecurity startup.
Per the Wall Street Journal, the deal, which would have been Alphabet’s largest acquisition ever, had reportedly set off red flags with antitrust and investor concerns, among others, possibly leading Wiz to abandon the deal. The startup’s latest valuation in May, valued the company at $12 billion valuation. Per Business Insider, the Google offer would have close to doubled that valuation. Wiz had raised $1 billion in that round of venture capital funding. The May funding round was managed by Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital. At the time, Rappaport had said that Wiz expects 2024 to be a year of consolidation in cybersecurity and that it would use the funding for product and talent development.
This failed attempt at a buyout was Alphabet’s second recent M&A disappointment, after the tech giant had reportedly decided to walk away from a deal to buy HubSpot, an online marketing software company. In March 2022, Alphabet had purchased cybersecurity firm Mandiant for $5.4 billion, as part of its effort to strengthen their cloud computing business and help companies face cyber threats, CNN reported.
