Consolidation continues apace on this planet of safety. Sources inform us that Lacework — a cloud safety startup that was valued at $8.3 billion post-money in its final funding spherical — is in talks to be acquired by one other safety participant, Wiz, for a worth of simply $150–$200 million.
Sources near the negotiations stated that the 2 firms have already signed a letter of intent and described the state of negotiations as “somewhere in the middle.” That’s to say, the acquisition isn’t but accomplished and the deal may nonetheless fall by means of.
Though each work within the wider space of cloud safety, sources inform us that there’s comparatively little aggressive overlap between the 2 firms so it might probably be a technology-plus-talent-plus-customer acquisition play. We’re nonetheless looking for out extra phrases of the deal, corresponding to whether or not it might be in inventory, money, or a combination.
Contacted for remark, Wiz wouldn’t affirm nor deny the stories on the file however supplied the next assertion to TechCrunch:
“Wiz has experienced unprecedented organic growth since its inception, and we are dedicated to pushing this growth even further. Simultaneously, we recognize that consolidation is the future of the security industry and therefore are actively engaged in discussions with companies across the industry. We are always exploring compelling M&A opportunities that will enhance both our technological capabilities and business expansion, as we strive to build the world’s leading cloud security platform.”
Wiz’s CEO and co-founder Assaf Rappaport — who beforehand co-founded and sold a earlier safety startup, Adallom, to Microsoft — has stated on quite a lot of events (corresponding to here) that it’s trying to hit $1 billion in annual recurring income forward of an IPO. We perceive that its gentle deadline is finish of 2025, however contemplating it announced ARR of solely $350 million in February 2024, the corporate has to get aggressive on bulking as much as get there. Lacework, we perceive, has ARR of round $100 million.
The Information has reported among the above particulars in the present day too.
The deal underscores a narrative of two components.
Half one: Safety startups proceed to draw numerous funding consideration, however some firms which have reached excessive valuations over current years are struggling to justify these numbers and are contemplating their choices as they arrive near the tip of their funding runway.
From what we perceive, Lacework’s buyers — the longer listing contains Snowflake Ventures, GV, Normal Catalyst, Tiger World, and lots of extra — had been procuring the corporate round to potential patrons, which is how Wiz got here into the body.
Lacework, we must always be aware, isn’t the one safety enterprise getting a valuation haircut. Simply final week, TechCrunch broke the information that Noname was in talks to be acquired by Akamai for $500 million, after final being valued at $1 billion.
Half two: Different gamers are rising as consolidators on this course of. Wiz — valued at round $10 billion — is certainly one of them.
The corporate is positioning itself as a one-stop-shop for all issues cloud safety en path to its IPO. Earlier this month Wiz acquired Gem Safety for $350 million, and it sounds just like the M&A is not going to finish with Lacework.
Lacework, based practically 9 years in the past and based mostly in San Jose, Ca., has raised over $1.8 billion from buyers through the years. Most of that funding — $1.3 billion — ties to a late November 2021 spherical that, on the time, valued the corporate at $8.3 billion.
