Cloud security company Wiz recently announced a massive fifth round of financing, boosting its bank account by $1 billion — a price that values the company at $12 billion and sets the company up to continue its recent wave of acquisitions.
Wiz plans to grow quickly and use $1 billion to fund a buying spree in 2024, which the company has already called the “year of security consolidation.” In December, Wiz DevOps startup Raftt has been acquiredwhich provides the ability to offload Kubernetes environments to the cloud and reduce developer downtime, was announced in April I picked up the security gem In a cash deal valued at approximately $350 million, adding the company's cloud detection and response capabilities to its portfolio.
Wiz, known for its aggressive growth strategy, has no plans to slow down, says Yinon Kostica, vice president of product and co-founder at Wiz.
“So what do we do with a billion dollars? It's a lot of money,” he says. “It allows us to be ready for additional acquisitions. I think there are many interesting areas in this space that have not yet been addressed, and we are always looking for innovative teams that can solve them in a unique way.”
Bet on a billion dollars The future of cloud security enhancement Highlights several current trends facing the cybersecurity industry today. As a result of the coronavirus pandemic, companies have pushed more operations to the cloud, which has exacerbated the problem It entailed better security But it created an extended attack surface. Companies like Wiz and its competitor Orca Security aim to help companies tame their growing security requirements by enhancing security visibility and control across cloud platforms — such as Amazon, Google, and Microsoft — and cloud services.
“In addition, discovery and remediation…is more difficult in the cloud, because it covers underlying cloud infrastructure, workloads, containers, and infrastructure as code,” says Kostica. “Automatic remediation is also a priority – the ability to automatically fix deviations from known good configurations, best practices, or compliance mandates.”
How to spend a billion dollars
Companies that combine cloud security controls from multiple platforms to improve visibility, detection, and response—what Gartner calls… Cloud Native Application Protection Platforms (CNAPPs) It was launched in recent years and attracted huge investments. In 2021, Lacework raised the bar high with $1.3 billion Series D funding roundThe company's value is estimated at $8.3 billion. Also that year, Orca Security Raised $550 million in Series C roundWhich raised the company's value to $1.8 billion.
Orca Security, for example, is not planning another round of financing and is instead focusing on organic and long-term growth, with healthy gross margins and a low burn rate, says Gil Giron, the company's CEO and co-founder. While acquisitions can be “done right,” he says, they also bring risks.
“We've seen it in the past, where some of the big players have played the same game — they've invested billions of dollars in acquisitions of great companies to (try to) integrate them and pay to create a Frankenstein-type product,” Giron says. “We all know that mergers and acquisitions are very difficult.”
Highlighting the treacherous nature of startups and financing, Lacework — a company that was valued at $8.3 billion less than three years ago — negotiated the sale of the company to Wiz for between $150 million and $200 million, but the deal fell through during due diligence. According to TechCrunch.
Best of breed to best in podium?
However, demand for consolidation in the cloud security sector appears to be strong. At the RSA conference this week, customers are increasingly looking not for a set of best-of-breed solutions, but for “the best platform,” says Wiz's Kostica.
“Integration is a key strength as customers want to run a platform, and don't want the hassle… of trying to buy and implement additional solutions and train their teams,” he says. “It's not like a Frankenstein's mix of products sold together; it should be a unified product — truly integrated — with a single data layer that helps them use it in a way that provides value.”
While cybersecurity providers like Wiz are driven to consolidate to keep up with competitors, their business clients also want to manage fewer vendors and technologies, says Andras Sear, Forrester vice president and principal analyst.
“Customers need lower licensing and maintenance costs for their cloud security tools,” he says, prompting cloud security companies — such as Palo Alto, Zscaler and Trend Micro — to find ways to simplify and lower costs.
Wiz doesn't plan on slowing down. Both supporters and critics have described the company's growth strategy as “aggressive,” according to Forbes August 2023 cover story.
However, Kostica sees no problem.
“To be honest, I've never understood what 'growing aggressively' means,” he says. “I think we're growing thanks to the huge interest we're seeing in the market from customers, and we're keen to offer a new way of doing cloud security.”
