Upwind raises $400M after turning down Datadog's takeover offer

Upwind, a San Francisco company that applies AI to cloud-security work, has closed a $400 million Series C at a $3.8 billion valuation, led by Bessemer Venture Partners with existing backers Greylock Partners and Craft Ventures also participating. The round lands nine months after Upwind closed a $250 million round at a $1.5 billion valuation.

The financing, which had been in the works for months, nearly collapsed after Datadog tried to acquire the company, according to a person familiar with Upwind. Datadog, a publicly traded company known for its software-monitoring, or observability, tools, wasn’t willing to top the $3.8 billion valuation venture investors had already set, this person said — so Upwind chose to remain independent.

Four years old, Upwind has grown quickly as AI-driven cybersecurity threats multiply. The company has posted quarterly ARR gains of $20 million to $30 million and is on track to end the year around $90 million in annual recurring revenue, according to a person familiar with its financials — putting its valuation at more than 40 times forecast revenue, a common benchmark for pricing software companies. That multiple still trails the 80x ARR that cybersecurity startup Cyera commanded, as TechCrunch reported earlier this year.

By turning down Datadog’s offer, Upwind is betting the company will eventually be valued well above the $3.8 billion Datadog offered — though with few cybersecurity companies going public in recent years, a future sale still looks like the likely outcome, and the startup keeps fielding acquisition interest from other suitors, a separate person familiar with the matter said.

Upwind was founded by Amiram Shachar, who previously sold his cloud-spend-management startup, Spot.io, to NetApp for $450 million. The company brands its approach to blocking threats “runtime” security — alerting on and fixing attacks and vulnerabilities in live services as they happen.

Why it matters

The round values Upwind among the priciest cybersecurity startups by revenue multiple, and its decision to stay independent despite a buyout offer signals how much upside AI-driven security vendors think they still have ahead of an eventual sale or IPO.