Consolidation continues apace in the world of security. Sources tell us that Lacework — a cloud security startup valued at $8.3 billion post-money in its latest funding round — is in talks to be acquired by another security player, Wiz, at a price of just $150-200 millions of $.
Sources close to the negotiations said the two companies have already signed a letter of intent and described the state of negotiations as “somewhere in the middle”. That is, the acquisition is not yet complete and the deal may fall apart.
Although both work in the broader field of cloud security, sources tell us there is relatively little competitive overlap between the two companies, so it would likely be a technology-plus-talent-plus-acquisition game. We’re still trying to learn more terms of the deal, such as whether it will be in stock, cash or a mix.
Contacted for comment, Wiz did not confirm or deny the reports in the file, but provided the following statement to TechCrunch:
“Wiz has experienced unprecedented organic growth since its inception, and we are committed to driving that 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 exciting M&A opportunities that will enhance both 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 multiple occasions (such as here) that it wants to reach $1 billion in annual recurring revenue before an IPO. We understand that his soft deadline is the end of 2025, but considering was announced ARR of just $350 million in February 2024, the company needs to get aggressive in terms of accumulation to get there. Lacework, we understand, has an ARR of about $100 million.
The information mentioned some of the above details today as well.
The deal highlights a two-part story.
Part one: Security startups are still attracting a lot of funding, but some companies that have reached high valuations in recent years are struggling to justify those numbers and are considering their options as they near the end of their funding runway.
From what we understand, Lacework’s investors — the longer list includes Snowflake Ventures, GV, General Catalyst, Tiger Global and more — have been shopping the company around to potential buyers, which is how Wiz came into the fold.
Lace, we should note, isn’t the only security business taking a valuation haircut. Just last week, TechCrunch broke the news that Noname was in talks to be acquired by Akamai for $500 million, after it was last valued at $1 billion.
Part two: Other players emerge as unifiers in this process. The Wiz — worth about $10 billion — is one of them.
The company is positioning itself as a one-stop shop for all things cloud security on the way to its IPO. Earlier this month Wiz acquired Gem Security for $350 million, and it sounds like the M&A won’t end with Lacework.
Founded nearly nine years ago and based in San Jose, California, Lacework has raised over $1.8 billion from investors over the years. The bulk of that funding — $1.3 billion — is tied to a round in late November 2021 that, at the time, valued the company at $8.3 billion.
