San Francisco-based startup Upwind, which uses AI to secure cloud infrastructure, has raised a $400 million Series C round at a $3.8 billion valuation led by Bessemer Venture Partners, with participation from existing backers including Greylock Partners and Craft Ventures.
The round comes nine months after Upwind closed its previous $250 million financing at a $1.5 billion valuation.
According to TechCrunch, Datadog, a publicly traded company that sells tools for monitoring how software runs, known as observability, approached Upwind with an acquisition offer. All this happened while the startup was arranging its current funding. However, the proposed deal failed due to not offering a premium over Upwind’s $3.8 billion valuation established by investors in the funding round.
Since its inception four years ago, Upwind has grown rapidly due to increasing AI-driven cybersecurity threats. The startup has reported $20 million to $30 million in annualized recurring revenue (ARR) each quarter and is also projected to end the year at roughly $90 million. That means the startup is 40 times more valuable than its forecast ARR, a common yardstick for pricing software companies.
Founded by Amiram Shachar, Upwind focuses on what it calls runtime security. Rather than concentrating exclusively on identifying vulnerabilities before software is deployed, its approach is designed to detect and help remediate threats while applications and cloud services are running.
By rejecting the acquisition offer, Upwind clearly showed that it believed that the company would ultimately be much more than the $3.8 billion that Datadog offered to pay. Upwind has also expanded beyond conventional cloud security as businesses deploy more AI infrastructure and autonomous agents. In September, it acquired Israeli startup Aegis in a stock-based transaction reportedly worth tens of millions of dollars and established Upwind AI Labs to focus on threats targeting AI systems and AI-driven workflows.
