Upwind, a San Francisco-based cloud security startup, has raised $400 million in Series C funding at a $3.8 billion valuation after reportedly declining an acquisition offer from Datadog. The round was led by Bessemer Venture Partners, with participation from existing investors including Greylock Partners and Craft Ventures.
According to Upwind’s official announcement on October 28, the funding brings its total capital raised to more than $800 million. The investment comes less than nine months after the company secured $250 million at a reported $1.5 billion valuation, more than doubling its valuation during that period.
Upwind Declines Datadog Acquisition Offer
The latest funding round reportedly faced uncertainty after Datadog, a publicly traded software monitoring and observability company, attempted to acquire Upwind. According to TechCrunch, citing a person familiar with Upwind, Datadog did not offer a premium above the $3.8 billion valuation established by venture capital investors, prompting the startup to remain independent.
The company continues to attract acquisition interest, according to the same source. However, Upwind has not publicly announced further acquisition negotiations or plans to pursue an initial public offering.
Upwind Revenue Growth Supports Higher Valuation
Founded in 2022, Upwind has been adding between $20 million and $30 million in annualized recurring revenue (ARR) each quarter, according to a person familiar with its financial performance. The company is projected to end 2026 with approximately $90 million in ARR, placing its latest valuation at more than 40 times its forecast annualized revenue.
For comparison, cybersecurity startup Cyera reportedly achieved a valuation equivalent to approximately 80 times its ARR earlier this year. Theory Ventures general partner Tomasz Tunguz also identified cybersecurity as a potential major category of enterprise AI software spending, following coding tools and customer support applications.
Funding to Support Cloud and AI Security Development
Upwind plans to use the new funding to expand its engineering operations and develop its cloud and AI security platform. Its technology focuses on runtime security, which identifies vulnerabilities, detects attacks, and supports remediation while cloud services are actively running.
The company is also developing AI sensors for endpoints, scanners for AI agents, and automated security tools. These include systems designed to investigate threats, verify exploitable vulnerabilities, and identify opportunities to resolve multiple security issues.
Upwind was founded by Amiram Shachar, who previously established cloud infrastructure management company Spot.io. Shachar sold Spot.io to NetApp for approximately $450 million in 2020 before founding Upwind two years later.
Featured image credits: Wikimedia Commons
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