Alphabet, the parent company of Google, is in advanced discussions to acquire Wiz, a cybersecurity startup, for a staggering $23 billion. This information comes from a source close to the matter who spoke with TechCrunch. The Wall Street Journal had previously reported on these discussions.
Google Cloud Approaches Wiz
Wiz, founded in 2020, was approached just a few weeks ago by Thomas Kurian, the head of Google’s cloud division, according to the source. Since that initial contact, negotiations have moved quickly, and both parties have tentatively agreed on the purchase price.
Potential Hurdles Ahead
While the deal seems promising, it is not without obstacles. The source mentioned that a deal of this size has many complexities and challenges that need to be resolved. Although the source did not specify these hurdles, they did mention that the negotiations could take another week to 10 days to finalize and that there is a 50% chance the deal could still fall apart.
Wiz’s Rapid Growth
Wiz has been growing at an astonishing rate. The company achieved an Annual Recurring Revenue (ARR) of $100 million just 18 months after its launch, making it one of the fastest-growing companies ever. By May, the company announced that its ARR had reached $350 million. According to the source, Wiz’s ARR has now surged to $500 million, and the company aims to hit an ARR of $1 billion next year.
Plans for the Future
Due to its rapid growth, Wiz had always intended to go public, but it wasn’t planning to launch its Initial Public Offering (IPO) this year or in 2025. The company was not actively looking for a buyer until Google approached it. However, collaboration with Google Cloud could provide Wiz with strong revenue synergies, meaning it could sell its product more effectively to Google’s extensive customer base.
Valuation and Comparisons
If the deal is finalized at $23 billion, it would value Wiz at 46 times its current ARR and 23 times its projected 2025 ARR. For comparison, Wiz’s primary competitor, Palo Alto Networks, is trading at just over 14 times its trailing 12 months revenue. Essentially, Google appears willing to pay nearly a 300% premium compared to Wiz’s closest competitor.
Who Backs Wiz?
Wiz’s backers include some big names in venture capital: Andreessen Horowitz, Cyberstarts, Index Ventures, Insight Partners, and Sequoia. These investors have supported Wiz through its rapid growth journey.
As the negotiations continue, the tech world is watching closely to see if one of the most significant tech acquisitions of the year will come to fruition.
