Upwind raises $400M at $3.8B valuation after rejecting Datadog offer

Upwind, a San Francisco-based AI-driven cloud security startup, has raised $400 million in a Series C funding round led by Bessemer Venture Partners, reaching a valuation of $3.8 billion, TechCrunch reported.

This latest funding round includes participation from existing investors such as Greylock Partners and Craft Ventures, and follows a previous $250 million financing at a $1.5 billion valuation nine months ago.

The funding process was nearly derailed when Datadog, a publicly traded observability software company, attempted to acquire Upwind. However, Datadog's offer matched the $3.8 billion valuation set by venture capital investors without any premium, leading Upwind to decline the acquisition and remain independent.

Upwind has experienced rapid growth amid increasing AI-driven cybersecurity threats, adding $20 million to $30 million in annualized recurring revenue each quarter and is projected to reach approximately $90 million by the end of the year. This places its valuation at over 40 times its forecasted ARR, a common metric for pricing software companies.

Cybersecurity is anticipated to be a significant wave of AI software adoption following AI coding tools and customer support, highlighting Upwind's strategic position in the market.