The somewhat stagnant M&A market may be about to get a jumpstart.
One of its biggest ever involving a venture capital-backed startup.
Alphabet, the parent company of Google, is reportedly in advanced talks to acquire cybersecurity startup Wiz for approximately $23 billion. The deal, which would be Google’s largest ever, was first reported in The Wall Street Journal.
In fact, the deal would be the largest ever for a VC-backed company, according to Crunchbase data. It is even bigger than Adobe’s ill-fated $20 billion deal to acquire design unicorn Figma in 2022 — a deal that fell through after facing pressure from regulators.
The deal is even more stunning considering Wiz, a cloud security startup, just locked up the biggest cybersecurity round of the year thus far in May when it raised $1 billion at a $12 billion valuation. The round was co-led by Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital.
The Google deal would essentially double Wiz’s valuation from just two months ago.
Wiz said it achieved $350 million in annual recurring revenue in 2023.
Google eyes bigger slice of cloud pie
The deal seems to mean Google is tired of being stuck in third place when it comes to cloud services — behind AWS and Microsft’s Azure. Wiz’s software helps companies secure their cloud applications — meaning Google could increase their security revenue.
This would not be Google’s first big cybersecurity buy. The tech giant bought Mandiant for $5.4 billion in 2022.
Exits
The cyber M&A market has shown some signs of life in the last six months — although investors likely expected more coming into the year.
Thus far, 45 VC-backed cybersecurity startups have been acquired this year — per Crunchbase data — far outpacing the 66 total startups bought all of last year.
On the other hand, the potential Google deal comes at a time when the IPO pipeline still seems slightly frozen — although perhaps thawing. Investors have often pointed to Wiz as a company that could go public whenever it chooses and likely will wait for the most opportune time.
After Wiz’s $1 billion raise in the spring, co-founder and CEO Assaf Rappaport openly talked about the company’s ambition to one day go public.
However, $23 billion can change a lot of plans.
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Illustration: Dom Guzman
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