Upwind Secures $400 Million Series C Funding, Opts to Remain Independent
Upwind, a San Francisco-based startup specializing in AI-driven cloud infrastructure security, has successfully raised $400 million in a Series C funding round, propelling its valuation to $3.8 billion. The round was led by Bessemer Venture Partners, with significant participation from existing investors such as Greylock Partners and Craft Ventures. This fresh capital injection comes just nine months after Upwind’s previous $250 million financing round at a $1.5 billion valuation.
Funding Details and Strategic Decisions
The recent funding round had been under negotiation for several months and nearly collapsed following an acquisition attempt by Datadog, a publicly traded company known for its observability tools that monitor software performance. According to a source familiar with Upwind, Datadog’s offer did not include a premium above the $3.8 billion valuation set by venture capital investors, leading Upwind’s leadership to reject the buyout proposal and continue on an independent growth path.
By choosing independence over acquisition, Upwind signals confidence in its long-term valuation potential. Despite this, the startup remains a target of acquisition interest within the cybersecurity space, a sector that has seen limited public offerings in recent years. Industry observers widely expect that an eventual sale might still be the most likely exit strategy for Upwind.
Rapid Growth Amid Rising Cybersecurity Threats
Founded four years ago by Amiram Shachar—who previously sold his cloud spend management company Spot.io to NetApp for $450 million—Upwind has seen rapid growth fueled by escalating AI-driven cybersecurity threats. The company focuses on “runtime” security, a real-time approach that detects and mitigates attacks and vulnerabilities in active cloud services.
Upwind’s revenue growth is impressive, adding between $20 million and $30 million in annualized recurring revenue (ARR) each quarter, with projections to reach approximately $90 million ARR by the end of the year. This growth translates to a valuation multiple exceeding 40 times forecasted ARR, a figure that, while high, remains below the 80x ARR multiple commanded by other emerging cybersecurity firms like Cyera, as reported by TechCrunch earlier this year.
Contextualizing Upwind’s Market Position
Cybersecurity is increasingly recognized as a critical frontier in AI software adoption. Tomasz Tunguz, general partner at Theory Ventures, recently identified cybersecurity as the “third big wave” of AI software that enterprises are willing to invest in, following AI tools for coding and customer support. This perspective aligns with Upwind’s growth trajectory and strategic decisions, underscoring the sector’s immense potential.
Upwind’s ability to raise significant capital at a high valuation and its decision to forego acquisition offers reflect its ambition to capitalize fully on this market opportunity. The company’s technology, backed by experienced leadership and strong investor support, positions it as a key player in protecting cloud infrastructure against increasingly sophisticated AI-powered cyber threats.
TechCrunch has reached out to both Upwind and Datadog for comment.
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