Series C funding round closed by Upwind at $3.8 billion valuation

San Francisco-based Upwind has secured a significant funding boost after walking away from an acquisition offer from publicly traded company Datadog. The startup has closed a $400 million Series C round at a valuation of $3.8 billion, led by Bessemer Venture Partners.

Existing investors Greylock Partners and Craft Ventures also participated in the latest financing, which comes nine months after Upwind's previous funding round valued the company at $1.5 billion. The new investment brings the total amount raised by the four-year-old startup to a substantial sum.

According to sources close to the matter, Datadog had attempted to acquire Upwind but ultimately failed to offer a premium above the valuation set by venture capital investors. As a result, Upwind decided to remain an independent entity and pursue further growth with its existing investors.

Upwind's rapid expansion has been driven in part by rising AI-driven cybersecurity threats. The startup has reportedly seen significant revenue growth, adding $20 million to $30 million in annualized recurring revenue each quarter. This puts the company on track to reach approximately $90 million in annualized recurring revenue by year-end.

The valuation of Upwind's latest funding round indicates a multiple of over 40 times its forecasted annual recurring revenue, a common metric used to price software companies. This is significantly lower than the valuation achieved by another fast-growing cybersecurity startup, Cyera, earlier this year.

Upwind's founders seem to be betting on the company's long-term value, given its decision to walk away from an acquisition offer worth $3.8 billion from Datadog.

This move suggests that Upwind's management believes the startup will eventually surpass this valuation through continued growth and success in the market.

The cybersecurity space is expected to experience significant growth, with some experts predicting it will become a major driver of AI software adoption after coding tools and customer support solutions.

Upwind has carved out a unique niche for itself by developing "runtime" security technology that detects and responds to threats in real-time, making it an attractive acquisition target for companies looking to bolster their defenses.

The startup's approach to cybersecurity has been led by Amiram Shachar, a seasoned entrepreneur who previously sold his cloud spend management company, Spot.io, to NetApp for $450 million.

Upwind's latest funding round has been a significant milestone for the company, following its decision to walk away from an acquisition offer by Datadog.

The startup has successfully raised $400 million in new funds, marking a notable achievement in the world of cybersecurity.

This influx of capital is expected to further drive Upwind's growth and innovation in the sector.