Wiz has decided to reject a $23 billion acquisition offer from Google, choosing to pursue an initial public offering (IPO) instead. CEO Assaf Rappaport announced this decision to Wiz’s 1200 employees, emphasizing their focus on reaching $1 billion in annual recurring revenue.
Background of Wiz
Founded in 2020 by four former Israeli military officers—Assaf Rappaport, Yinon Costica, Roy Reznik, and Ami Luttwak, who each own 9% of the company—Wiz has grown rapidly. The company offers cloud security products that include prevention, active detection, and response, which appeal to large firms and compete with Microsoft’s security software.
Google Cloud, part of Alphabet, has been under pressure to grow due to competition from Microsoft and Amazon. The acquisition of Wiz would have helped, especially since Google Cloud became profitable in 2023. However, Google Cloud and its CEO, Thomas Kurian, still face pressure to keep expanding, particularly during the current AI boom.
Why Wiz Rejected Google’s Offer
“Saying no to such humbling offers is tough,” Rappaport wrote in a memo obtained by CNBC. The decision was influenced by antitrust and investor concerns, according to a source familiar with the company’s reasoning.
Despite the substantial premium over its last private valuation of $12 billion, Wiz’s management, backed by investors, decided to remain independent.
Impact on the Tech Market and Investors
The tech market has seen few exits this year, with startups waiting for better market conditions and companies cautious about regulatory approval. This failed deal will likely disappoint venture firms like Index Ventures, Sequoia Capital, and Thrive Capital, which have large investments in Wiz and need significant exits to ensure returns on their funds.
How Has Wiz Performed Financially?
Wiz has demonstrated impressive financial performance, hitting $100 million in annual recurring revenue within 18 months and achieving $350 million in 2023. The company is backed by notable investors, including Cyberstarts, Index Ventures, Sequoia Capital, and Thrive Capital. Wiz’s founders previously established and sold the security startup Adallom to Microsoft for $320 million in 2015.
The company benefited from the shift to remote work during the Covid-19 pandemic, which increased the demand for cloud-based software. Wiz provides security solutions for data and applications on public clouds like Amazon, Google, Microsoft, and Oracle.
In his email to employees, Rappaport emphasized the company’s dedication to building a platform loved by both security and development teams. He acknowledged the market validation following the news and expressed gratitude for the faith shown by employees, investors, and customers. The email concluded with a motivational note, encouraging the team to continue their hard work.
Featured Image courtesy of Brandon Wade/REUTERS
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