Syed Imran Haider 
Wiz has made the decision to turn down a potential deal with Google. It would have seen the search engine giant acquire it for a value of $23 billion in its largest-ever acquisition.
However, Wiz has told its employees that it would continue with its previous plans of going forward with an Initial Public Offering (IPO).
The Decision
Assaf Rappaport, the co-founder of Wiz, sent a memo to the company’s employees. He said that it had been tough to turn down such a humbling offer.
An individual shared some details regarding the matter on the condition of anonymity. They revealed that the company had decided to abandon the deal due to investor and antitrust concerns.
According to Rappaport, they would now shift their focus on the next milestones of the company. This includes an IPO and annual recurring revenue of $1 billion.
Had the startup agreed to this ideal, its valuation would have doubled. It was able to reach a valuation of $12 billion after its latest funding round.
After launching in 2020, Wiz underwent rapid growth under Rappaport. The co-founder had been aiming at an IPO as early as May.
The Company
After 18 months of its launch, the company managed to reach an annual recurring revenue of about $100 million. In the last year, Wiz saw its annual recurring revenue reach $350 million.
The cloud security products that Wiz offers include active detection and response, along with prevention. Large companies have found this portfolio to be quite appealing.
It would have worked in favor of Google, as it would have been able to go up against Microsoft, which also deals with security software.
Alphabet has seen competition rise for its cloud segment significantly, thanks to front-runners like Amazon and Microsoft.
After years of investing heavily in its cloud unit, Google had finally manage to drive it to profitability in 2023.
In recent years, there has been consistent growth in Google Cloud under the leadership of CEO Thomas Kurian.
However, it has recently faced considerable pressure to continue its growth and attract business during the AI boom.
The Exit
This year has not seen many exits in technology. It is because the regulatory environment has become quite challenging for acquisitions.
Moreover, startups have also chosen to wait before going public because they want the market to be more receptive.
Venture backers are likely to find Wiz’s decision disappointing. In recent years, backers like Sequoia, Lightspeed Venture Partners, Insight Partners and Index Ventures have raised multi-billion dollar funds.
These funds can only generate substantial returns for their partners when they see exits of about $10 billion. However, such events are extremely rare.
Previously, Wiz’s founders had established a security startup with the help of funding from Index Ventures and Sequoia, which was named Adallom.
In 2015, it had been sold for $320 million to Microsoft. Doug Leone, a former Sequoia leader, said that investing in Wiz in the beginning had been a smart move.
It took Wiz less than a year to announce a funding round of about $100 million.
