Wiz, the buzzy startup developing an all-in-one cloud security platform, is on an acquisition spree to quickly expand its business toward an IPO.
Now it has closed a major funding round of $1 billion to support this march.
The Series E – co-led by Andreessen Horowitz, Lightspeed Venture Partners and Thrive – values Wiz at $12 billion, making it one of the highest valued cybersecurity startups today.
This is a notable advance from Wiz’s last capital raise in February 2023, when the company closed a $300 million round at $10.3 billion post-funding. When rumors of this latest fundraising began circulating in the market in March, the amount was pegged at $800 million. The fact that its Series E is now at $1 billion shows how hot activity is at Wiz right now. “Iconic” was the word one investor used to describe the company when speaking to TechCrunch.
(The company confirmed that the Series E also has a small secondary component. Sources close to the deal say it’s around $30 million to $40 million, “a few tens of millions of dollars.”)
Wiz co-founder and CEO Assaf Rappaport said in an interview that Wiz plans to continue to grow its platform organically through more talent hiring and investments in research and development. But since there are now countless cybersecurity startups, the New York-based startup sees an excellent opportunity to grow inorganically through acquisitions and onboard customers, talent and technology more quickly.
“We see two types of opportunities in the market right now,” he said. “There are ex-unicorns” — startups that have raised significant money at valuations of over $1 billion but may not have grown as expected and are now exploring options other than going public — “and also exciting, more recent startups -oops, superstars with a great development.” in front of them. We now have the opportunity to combine both.”
The large size of this round gives Wiz plenty of room to make acquisitions in cash, meaning less equity in Wiz itself needs to be given up – a nod to the company’s intentions to go public in the future.
The fundraiser comes at a time when Wiz is already bringing together smaller businesses. Just a month ago, the company acquired Gem Security – which Rappaport says now falls into the latter “exciting, younger” category – for $350 million. Just weeks later, Wiz signed a letter of intent to purchase Lacework, the startup once valued at $8.3 billion, for just $168 million. (That would make it, in Rappaport’s terminology, an “ex-unicorn.”) The latter deal fell through, we now understand that due diligence is a reminder that there is merely an interest and the money to buy enough to close deals across the deal line.
The company has a long list of companies to choose from. By one estimate, there are currently 62 cybersecurity startups with a recent valuation of over $1 billion. The list includes Aqua and Orca – who are not related but live together – as well as Netskope, Snyk, Arctic Wolf, Axonius and many more. The smaller ones are in the hundreds. They all compete with much larger players in the market including Palo Alto Networks, Crowd Strike and more.
Wiz was founded just four years ago by Rappaport and his co-founders Ami Luttwak, Yinon Costica and Roy Reznik (all previously at Microsoft, with experience building startups and exit successes in the past). The company says it has signed deals with about 40% of Fortune 100 companies, including some of its largest customers including BMW, Colgate-Palmolive, strategic investor Salesforce and Mars.
Combined, this deal now totals $350 million in ARR. That’s still a far cry from the $1 billion ARR the company aims to achieve by the end of 2025. However, this goal is another reason why the company wants to grow through acquisitions.
Wiz’s appeal in the market is partly due to its target area and partly to its approach.
Companies have made significant investments in cloud services to speed up their workflows and make their IT more flexible. However, this shift has brought with it a significantly different security profile for these organizations: network and data architectures are more complicated and the attack surfaces are larger, creating opportunities for malicious hackers to find ways to break into these systems.
Wiz has stood out in a crowded market by taking an all-in-one platform approach. By ingesting data from AWS, Azure, Google Cloud and other cloud environments, Wiz scans applications, data and network processes for security risk factors and provides its users with a range of detailed views to understand where these risks exist and how to remediate them. Its platform currently covers around 13 different areas, from code security to container environment security to supply chain security. Additionally, the company integrates and collaborates with a number of other startups to expand its ecosystem (and its malleability for customers).
Philip Clark, who led the investment for Thrive Capital, described AI as part of the “next wave of security problems,” and Wiz has also expanded its activities there, particularly with AI security posture management.
“It’s about meeting customers where their needs are,” Sarah Wang, general partner at a16z, told TechCrunch. “There is nothing that directly competes with Wiz in the cloud security space.”
In the meantime, there are numerous other options. When I spoke with Rappaport for this story on Monday, he had just landed in San Francisco to attend the RSA security conference, where nearly 600 companies will be exhibiting: a perfect opportunity to do some shopping.
The financing, which also included Greylock and Wellington Management as well as previous backers Cyberstarts, Greenoaks, Howard Schultz, Index Ventures, Salesforce Ventures and Sequoia Capital, brings Wiz’s total raised to $1.9 billion.
This long list of big-name backers, which Rappaport has added to the list it has rejected, underscores investors’ current interest in the company.
“Wiz is nothing short of a rocket ship,” another investor, Arsham Memarzadeh of Lightspeed, said in a statement.