July 16, 2024

Nobody beats the Wiz

Hi there, 

Google’s parent Alphabet is closing in on a deal to acquire cloud security startup Wiz for $23B, per WSJ reports. (Note: rumors of it acquiring HubSpot are now dead.)

It would be Google's biggest acquisition ever — nearly 2x its $12.5B purchase of Motorola Mobility in 2012.

A tie up could help Google bolster its cloud platform and security positioning against market leaders like Amazon’s AWS and Microsoft’s Azure.

The acquisition would also follow in the footsteps of Google’s $5.4B acquisition of cybersecurity company Mandiant in 2022.

What about regulatory scrutiny?

This may also be an implicit bet by Google that the regulatory hurdles that have slowed big tech M&A will be lower should Trump win in November.

Wiz kid 

Wiz, which offers an all-in-one cloud security platform used by 40% of the Fortune 100, landed a $12B valuation in May, just 4 years after its founding. 

Its Mosaic score history — which can be thought of as a stock chart for a private company — puts it in the top 1% of companies on the CBI platform. 

Wiz’s rising score follows a series of partnerships and fundings over the last 2 years. 

It’s part of a group of cybersecurity startups that have grown rapidly with the cloud computing wave. 

Wiz has sprinted ahead in valuation, and with ample fundraising over the past couple years, it has also grown its team dramatically vs. its peers, as CB Insights headcount data below highlights.

Buyer interviews conducted by CBI cite Wiz’s ease of deployment and use, comprehensive cloud security features, and ability to provide actionable insights quickly as key strengths.

For this customer, for example, Wiz’s tech beat out incumbent Palo Alto as well as startup competitor Orca Security. 

See more customer perspectives on cloud security players’ pricing here and competitive differentiation here. 

Wiz has grown revenue rapidly. At the time of its $1B Series E in May, Wiz said it had achieved $350M ARR in 2023. Its ARR now stands at a reported $500M.

A $23B acquisition from Google would mark a hefty 46x revenue multiple, although with Wiz's growth of 100%+, the forward multiples become less stratospheric.

Cyber consolidation

A deal would come alongside rising cyber consolidation in the last year as cyber leaders look to keep up with an evolving attack surface. 

For example, Cisco’s acquisition of data analysis and security company Splunk for $28B was announced in September 2023 and closed in March 2024. 

See more on cyber leaders’ acquisition activity in our Tech Trends 2024 report here.

I love you.

Anand

@asanwal 

P.S. See what happened in tech M&A in Q2’24. Download the free State of Venture report here.

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