Consolidation continues apace in the world of security. Sources tell us that Lacework — a cloud security startup that was valued at $8.3 billion in its latest funding round — is in talks to be acquired by another security player, Wiz, for a price tag of just $150 million to $200 million.
Sources close to the negotiations said the two companies had already signed a letter of intent and described the state of the negotiations as “somewhere in the middle.” This means that the acquisition is not yet complete and the deal may fail.
Although both operate in the broader field of cloud security, sources tell us there is relatively little competitive overlap between the two companies, so it's likely a process of acquiring technology as well as talent as well as customers. We're still trying to figure out more terms of the deal, like whether it will be in stock, cash, or a combination.
Contacted for comment, Wiz neither confirmed nor denied the reports on record but provided the following statement to TechCrunch:
“Wiz has experienced unprecedented organic growth since its inception, and we are committed to driving this growth even further. At the same time, we recognize that consolidation is the future of the security industry and are therefore actively engaged in discussions with companies across the industry. We are always exploring opportunities Attractive M&A that will enhance our technology capabilities and expand our business, as we strive to build the world's leading cloud security platform.
Wiz CEO and co-founder Assaf Rappaport — who co-founded and sold a previous security startup, Adallom, to Microsoft — has said on a number of occasions (such as here) that Wiz is looking to generate $1 billion in annual recurring revenue in the future from its IPO. We understand that the soft deadline is the end of 2025, but given that it only reported an annual revenue rate of $350 million in February 2024, the company will have to be aggressive to reach its target. We understand that Lacework has an annual revenue rate of about $100 million.
The Information reported some of the above details today as well.
The deal confirms a two-part story.
Part 1: Security startups continue to attract a lot of funding interest, but some companies that have reached high valuations in recent years are struggling to justify those numbers and are weighing their options as they near the end of their funding runway.
From what we understand, Lacework's investors – the longest list includes Snowflake Ventures, GV, General Catalyst, Tiger Global and many more – have been shopping the company around for potential buyers, which is why Wiz appears in the frame.
It should be noted that Lacework is not the only security company taking a devaluation. Just last week, TechCrunch broke the news that Noname was in talks to acquire Akamai for $500 million, down from its last valuation of $1 billion.
Part Two: Other players emerge as unifiers in this process. Waze — worth about $10 billion — is one of them.
The company is positioning itself as a one-stop-shop for all things cloud security on its way to an IPO. Earlier this month, Wiz acquired Gem Security for $350 million, and it looks like the M&A won't end with Lacework.
Founded nearly nine years ago and headquartered in San Jose, California, Lacework has raised more than $1.8 billion from investors over the years. Most of that funding — $1.3 billion — is tied to a late November 2021 round that valued the company at $8.3 billion at the time.
Cloud security startup Wiz reaches $100M in ARR in just 18 months
