Upwind Raises $400 Million at $3.8 Billion Valuation After Rejecting Datadog
Upwind raises $400 million at a $3.8 billion valuation after rejecting Datadog, as its cloud security ARR heads toward $90 million this year amid scarce IPOs.
Summary
On October 28, 2026, San Francisco cloud security startup Upwind raised a $400 million Series C at a $3.8 billion valuation, led by Bessemer Venture Partners with existing backers Greylock Partners and Craft Ventures. Nine months earlier, it raised $250 million at $1.5 billion. The months-long financing nearly unraveled when publicly traded observability company Datadog tried to acquire Upwind but offered no premium above the venture-set valuation, prompting the startup to remain independent and bet it can become more valuable.
Four-year-old Upwind, founded by Amiram Shachar, uses AI-driven runtime security to detect and remediate attacks and vulnerabilities in active cloud services in real time. It is adding $20 million to $30 million in annualized recurring revenue each quarter and is projected to finish 2026 near $90 million, valuing it above 40 times forecast ARR, but below Cyera’s 80 times multiple. Shachar previously sold cloud spending startup Spot.io to NetApp for $450 million. Theory Ventures general partner Tomasz Tunguz identifies cybersecurity as the third major paid AI software wave after coding and customer support. Upwind continues attracting buyers, and limited cybersecurity IPO activity makes an eventual sale the likeliest outcome.
Positives
- $400 million in new capital gives Upwind substantial funding to expand its AI-driven cloud runtime security platform.
- $3.8 billion marks Upwind’s valuation nine months after raising $250 million at a $1.5 billion valuation.
- $20 million to $30 million in additional annualized recurring revenue each quarter signals rapid commercial growth.
- Roughly $90 million in projected 2026 ARR places Upwind among the fastest-growing cloud security startups.
- Continued acquisition interest gives Upwind strategic options after rejecting Datadog’s offer.
Risks & concerns
- More than 40 times forecast ARR leaves Upwind carrying a demanding valuation that depends on sustained rapid growth.
- Datadog offered no premium above $3.8 billion, limiting the immediate financial case for accepting its acquisition proposal.
- Few cybersecurity companies have gone public in recent years, narrowing Upwind’s potential exit routes.
- An eventual sale remains the likeliest outcome despite Upwind’s decision to remain independent.