AI Security Startup Nabs $400M, Rejects Datadog Buyout

San Francisco-based Upwind, an AI-powered cloud infrastructure security firm, has successfully closed a $400 million Series C funding round, establishing a valuation of $3.8 billion. The investment was led by Bessemer Ventures, with participation from existing investors. This funding comes just nine months after Upwind's previous $250 million financing round, which valued the company at $1.5 billion. The significant capital infusion was nearly derailed when Datadog, a prominent observability software company, reportedly made an acquisition attempt. However, Upwind declined the offer as Datadog did not exceed the $3.8 billion valuation set by venture capital investors, opting instead to remain independent.

Upwind has experienced rapid expansion, driven by increasing AI-driven cybersecurity threats. The four-year-old startup is projected to end the current year with approximately $90 million in annualized recurring revenue (ARR). Both venture capital investors and Datadog valued Upwind at over 40 times its forecast ARR, a high multiple common for software companies but lower than some recent cybersecurity startups. The decision to reject an acquisition indicates Upwind's belief in its future value exceeding Datadog's offer. The company, founded by Amiram Shachar, who previously sold Spot.io for $450 million, specializes in "runtime" security, addressing threats in real-time within active services.