Upwind, a San Francisco-based cybersecurity startup specializing in artificial intelligence-driven cloud infrastructure protection, has successfully closed a massive $400 million Series C financing round. The new investment pushes the four-year-old company’s valuation to an impressive $3.8 billion.
The funding round was led by Bessemer Venture Partners, with continued participation from existing backers, including Greylock Partners and Craft Ventures. This latest influx of capital arrives just nine months after Upwind closed its previous financing event, a $250 million round that valued the startup at $1.5 billion in January.
The rapid succession of funding rounds highlights the intense investor demand for advanced cloud security solutions as organizations worldwide grapple with a shifting threat landscape. However, the path to closing this latest $400 million round was not entirely straightforward. According to a person familiar with the matter, the financing had been in the works for months and very nearly fell apart late in the process due to acquisition interest from Datadog.
Datadog, a publicly traded heavyweight that provides software observability and monitoring tools, attempted to acquire Upwind outright rather than allowing the startup to proceed with its venture capital financing. Crucially, Datadog’s buyout proposal did not offer a premium above the $3.8 billion valuation already established by the venture capital investors leading the Series C round. Faced with the choice of selling to a larger public company at the VC-set price or remaining independent to capture future growth, Upwind ultimately decided to walk away from the acquisition table and stick to its independent trajectory.
The decision underscores the immense confidence Upwind’s leadership and investors have in the company’s long-term market potential. Founded by serial entrepreneur Amiram Shachar—who previously built and successfully sold cloud spend management startup Spot.io to NetApp for $450 million—Upwind has experienced rapid commercial expansion.
The startup has been consistently adding between $20 million and $30 million in annualized recurring revenue each quarter. According to a source with knowledge of the company’s internal financials, Upwind is projected to close out the year at approximately $90 million in ARR.
At the $3.8 billion valuation, both the venture capital syndicate and Datadog were pricing the startup at more than 40 times its forecast ARR. While a 40x multiple is robust by historical software industry standards, it actually sits below the staggering multiples seen elsewhere in the current cybersecurity market. For instance, Cyera, another fast-growing security startup, recently commanded an 80x ARR multiple as it pursued a $12 billion valuation despite ongoing operating losses, according to prior industry reporting.
The willingness of investors to pay high multiples for cybersecurity firms aligns with broader macroeconomic and technological trends. Industry analysts and venture capitalists widely view cybersecurity as the next massive commercial frontier for enterprise AI spending. Theory Ventures general partner Tomasz Tunguz recently outlined this thesis in a widely read industry publication, noting that cybersecurity is poised to become the third major wave of AI software that enterprise customers will eagerly pay for, following closely behind AI-powered coding assistants and customer support tools.
By rejecting Datadog’s acquisition overture, Upwind’s leadership has signaled a clear belief that the company will ultimately scale to a valuation well north of the $3.8 billion threshold established by Bessemer and its co-investors. Yet, the broader market dynamics for venture-backed enterprise technology firms present a complex exit environment. Given that relatively few cybersecurity companies have successfully completed initial public offerings in recent years, an eventual acquisition by a strategic buyer remains a statistically probable long-term outcome for startups of Upwind’s scale.
Even after turning down Datadog’s bid, Upwind continues to draw substantial acquisition interest from other industry players, according to sources familiar with the company’s positioning. The ongoing allure of the startup stems largely from its specialized technical approach to stopping breaches.
Upwind focuses heavily on what it defines as "runtime" security. Traditional cloud security tools often focus on scanning static code or storage configurations before deployment. In contrast, Upwind’s platform operates on active cloud services in real time, allowing organizations to detect, alert on, and automatically remediate attacks and vulnerabilities as they happen within live production environments. This real-time visibility has resonated strongly with enterprise security teams looking to counteract automated, AI-driven cyber threats that move faster than traditional remediation workflows can handle.
Representatives for both Upwind and Datadog were approached for comment regarding the acquisition talks and the recent financing round. As the company absorbs its substantial new capital reserve, Upwind plans to continue scaling its engineering, sales, and product development operations to meet the accelerating global demand for real-time cloud infrastructure protection.
