The key facts

  • Upwind raised $400 million at a $3.8 billion valuation — the round was led by Bessemer Ventures, with Greylock Partners and Craft Ventures participating
  • Datadog attempted to acquire the startup but did not offer a premium to the $3.8 billion valuation, and Upwind remained independent
  • Expected annual ARR is about $90 million; the valuation exceeds projected revenue by more than 40 times

The round that almost fell apart

San Francisco startup Upwind, which uses AI to protect cloud infrastructure, has raised $400 million in a Series C round at a $3.8 billion valuation. The round was led by Bessemer Ventures, with existing investors Greylock Partners and Craft Ventures participating. TechCrunch reports. The new funding had been in the works for several months and nearly fell apart: publicly traded Datadog, which sells observability tools for monitoring software, attempted to acquire the company. According to a source familiar with Upwind, Datadog did not offer a premium to the $3.8 billion valuation set by venture investors, so the startup decided to remain independent.

Valuation more than doubled in nine months

The round closed just nine months after the previous one: in January, Upwind raised $250 million at a $1.5 billion valuation. Founded four years ago, the company is growing rapidly amid AI-driven cybersecurity threats: it is adding $20–30 million in annual recurring revenue (ARR) per quarter and, according to a source familiar with its financials, is expected to end the year at roughly $90 million. This means both the venture investors and Datadog valued the company at more than 40 times projected ARR — a high, though still lower, multiple than the 80x ARR at which another fast-growing cybersecurity startup, Cyera, was valued this year.

Betting on independence and market context

By turning down the offer, Upwind is evidently betting that the company will ultimately be worth more than the $3.8 billion Datadog was willing to pay — though TechCrunch notes that, given the small number of IPOs among cybersecurity companies in recent years, a sale remains the most likely scenario; according to a source, interest in an acquisition persists. Founder Amiram Shachar previously sold his previous cloud cost management startup, Spot.io, to NetApp for $450 million. Upwind itself describes its approach as Tomasz Tunguz, who wrote in his blogthat cybersecurity will become the third big wave of paid AI software, after coding tools and customer support. TechCrunch reached out to both Upwind and Datadog for comment.