Consolidation continues apace on the planet of security. Sources inform us that Lacework — a cloud security startup that was valued at $8.3 billion post-money in its final funding spherical — is in talks to be acquired by one other security participant, Wiz, for a value of simply $150–$200 million.
Sources near the negotiations mentioned that the 2 firms have already signed a letter of intent and described the state of negotiations as “someplace within the center.” That’s to say, the acquisition will not be but accomplished and the deal might nonetheless fall by way of. Though each work within the wider space of cloud security, 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, equivalent to whether or not it might be in inventory, money, or a combination.
Wiz has mentioned on plenty of events 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 introduced ARR of solely $350 million in February 2024, the corporate has to get aggressive on bulking as much as get there. Laceworks, we perceive, has ARR of round $100 million.
The Info has reported among the above particulars immediately too.
The deal underscores a narrative of two elements.
Half one: Safety startups proceed to draw lots of funding consideration, however some firms which have reached excessive valuations over latest years are struggling to justify these numbers and are contemplating their choices as they arrive near the top of their funding runway.
From what we perceive, Laceworks’ traders — the longer record consists of Snowflake Ventures, GV, Basic Catalyst, Tiger World, and lots of extra — had been procuring the corporate round to potential consumers, which is how Wiz got here into the body.
Laceworks, we must always word, will not be the one security enterprise getting a valuation haircut. Simply final week, information.killnetswitch 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 one in every of them.
“Wiz has skilled unprecedented natural development since its inception, and we’re devoted to pushing this development even additional,” a spokesperson from Wiz mentioned in an announcement offered to information.killnetswitch. “Concurrently, we acknowledge that consolidation is the way forward for the security business and subsequently are actively engaged in discussions with firms throughout the business. We’re at all times exploring compelling M&A alternatives that may improve each our technological capabilities and enterprise growth, as we attempt to construct the world’s main cloud security platform.”
Lacework, based practically 9 years in the past and based mostly in San Jose, Ca., has raised over $1.8 billion from traders over time. 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.
