A rival company called Wiz is rumored to be closing on a deal to acquire the cloud security startup.
Consolidation is moving quickly Lacework
in the realm of safety. Wiz, another security player, is reportedly in talks to acquire Lacework, a cloud security startup valued at $8.3 billion post-money in its most recent funding round, for as little as $150 million to $200 million, according to sources.
The two businesses have already signed a letter of intent, according to sources close to the talks, who also characterize the talks as being “somewhere in the middle.” In other words, the acquisition is not finalized and there is still a chance that the deal will collapse.
Even though both companies operate in the larger field of cloud security, sources indicate that there isn’t much of a competitive overlap between them, so this is probably more of a technology plus talent plus customer acquisition play. We’re still looking for more information about the deal, like whether it would be paid for with cash, stock, or a combination of the three.
When contacted for comment, Wiz gave Shuttech the following statement but neither confirmed nor denied the reports on the record:
From the company’s founding, Wiz has grown at an unprecedented rate organically, and we’re committed to accelerating this growth. In addition, we actively participate in conversations with security industry companies because we acknowledge that industry consolidation is the way of the future for this sector. In our ongoing quest to create the most advanced cloud security platform in the world, we are constantly looking into attractive M&A prospects that will advance both our technological prowess and business growth.
A number of times (including here) Wiz’s CEO and co-founder Assaf Rappaport has stated that the company wants to reach $1 billion in recurring revenue annually before going public. Rappaport previously co-founded and sold a security startup, Adallom, to Microsoft. Although the company announced an ARR of only $350 million in February 2024, we understand that its soft deadline is the end of 2025. Nevertheless, the company needs to step up its game to meet its objective. We know that Lacework has an ARR of approximately $100 million.
The agreement highlights a dual narrative.
Part one: Security startups continue to attract a lot of funding attention, but some companies that have reached high valuations over recent years are struggling to justify those numbers and are considering their options as they come close to the end of their funding runway.
According to what we gather, Wiz entered the picture when Lacework’s investors—a longer list that includes GV, General Catalyst, Tiger Global, and many more—were shopping the business to possible purchasers.
It should be noted that Lacework is not the only security company experiencing a decline in valuation. Shuttech revealed just last week that Noname, which was last valued at $1 billion, was in negotiations to be purchased by Akamai for $500 million.
Part two: In this process, other players are starting to emerge as consolidators. One of them is Wiz, which is estimated to be worth $10 billion.
In the run-up to its IPO, the company is presenting itself as a one-stop shop for everything related to cloud security. Wiz purchased Gem Security earlier this month for $350 million, and it appears that Lacework will not be the last company to be acquired in a merger or acquisition.
Founded in San Jose, California, almost nine years ago, Lacework has raised more than $1.8 billion from investors. The majority of that funding, $1.3 billion, comes from a late November 2021 funding round that made the company’s valuation $8.3 billion at the time.
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