Upwind, a San Francisco AI-driven cloud security startup, completed a $400 million Series C financing at a $3.8 billion valuation, led by Bessemer Ventures and joined by existing investors Greylock Partners and Craft Ventures.
The new round follows a $250 million raise nine months earlier that valued the company at $1.5 billion.
According to a source familiar with Upwind, the latest funding nearly collapsed when Datadog tried to acquire the firm. Datadog, a publicly listed observability provider, did not propose a premium over the $3.8 billion valuation set by venture investors, prompting Upwind to remain independent.
Four years after its founding, Upwind has expanded quickly amid growing AI-powered cyber threats, adding $20 million to $30 million in annualized recurring revenue each quarter and is expected to finish the year around $90 million, a source said. This places the valuation at more than 40 times its projected ARR, a typical metric for software pricing, though lower than the 80-times ARR multiple that investors assigned to fellow cybersecurity startup Cyera earlier this year.
Theory Ventures general partner Tomasz Tunguz wrote that cybersecurity is likely to become the third major AI software wave after AI coding and customer-support tools.
By refusing Datadog's offer, Upwind signals confidence that its future worth will exceed the $3.8 billion Datadog was prepared to pay, though a sale remains the most probable exit given the scarcity of recent cybersecurity IPOs.
Acquisition interest in the startup continues, a source added.
Founder Amiram Shachar, who previously sold cloud spend-management company Spot.io to NetApp for $450 million, leads Upwind, which describes its "runtime" security approach as real-time detection and remediation of attacks on active services.
TechCrunch has reached out to Upwind and Datadog for comment.
