Alphabet, Google’s parent company, is in advanced talks to acquire cybersecurity startup Wiz for $23 billion, a source close to the negotiations told TechCrunch.
Wiz, founded in 2020, has been a rising star in the cybersecurity space. The company was approached a few weeks ago by Thomas Kurian, head of Google’s cloud division, initiating swift negotiations that tentatively set the purchase price at $23 billion.
This would more than double Wiz’s last private valuation of $12 billion, achieved in May when it raised a $1 billion Series E.
Rapid Growth and Market Position
Wiz’s growth trajectory has been nothing short of remarkable. The company reached an annual recurring revenue (ARR) of $100 million just 18 months after its launch. By May, its ARR had escalated to $350 million, and it currently stands at $500 million.
The company projects to hit an ARR of $1 billion next year. These impressive figures highlight Wiz’s position as one of the fastest-growing companies in the cybersecurity sector.
Despite its rapid growth, Wiz had no immediate plans for an initial public offering (IPO) until Google’s approach. The potential acquisition by Google Cloud presents strong revenue synergies, offering Wiz a robust platform to expand its customer base through Google’s extensive reach.
Valuation and Market Comparisons
If the deal closes at the proposed $23 billion, Wiz would be valued at 46 times its current ARR and 23 times its projected 2025 ARR. This valuation significantly outpaces its main competitor, Palo Alto Networks, which trades at just above 14 times its trailing 12 months revenue.
Google’s willingness to pay nearly a 300% premium underscores the strategic importance it places on integrating Wiz’s capabilities into its cloud offerings.
Deal Dynamics and Challenges
While the negotiations have progressed quickly, the source indicated that a deal of this magnitude faces numerous hurdles. Specific challenges were not disclosed, but they typically involve regulatory approvals, integration logistics, and agreement on final terms.
The negotiations could extend another week to 10 days and have a 50% chance of falling apart, reflecting the complexity of such a significant acquisition.
Strategic Implications for Google Cloud
For Google Cloud, acquiring Wiz would enhance its cybersecurity portfolio, providing a competitive edge in protecting its clients against evolving digital threats. Cybersecurity remains a critical concern for enterprises globally, and integrating Wiz’s solutions could significantly bolster Google Cloud’s market position.
Backers and Investor Perspective
Wiz’s investors, including Andreessen Horowitz, Cyberstarts, Index Ventures, Insight Partners, and Sequoia, stand to gain substantially from the acquisition. The deal would validate their early investments and underscore the potential returns in the burgeoning cybersecurity market.
Acquisition of Wiz
As Alphabet’s Google Cloud division aims to finalize the acquisition of Wiz, the potential deal highlights the strategic importance of cybersecurity in today’s digital landscape.
If successful, this acquisition would mark a significant milestone for both companies, setting the stage for enhanced innovation and market leadership in cybersecurity solutions.
