Google-Wiz deal fails, company will seek IPO | Wilnesh News

Wiz abandons $23 billion acquisition deal Googlewhich would be the search giant’s largest-ever acquisition, told employees it would proceed with its initial public offering as previously planned.

“It’s difficult to say no to such a mean offer,” Wiz co-founder Assaf Rappaport wrote in a memo to company employees obtained by CNBC, a person familiar with Wiz’s thinking said. said antitrust and investor concerns were part of the reason for abandoning the potential deal.

The company will focus on its next milestones: an initial public offering and $1 billion in annual recurring revenue, Rappaport wrote. The company had been eyeing both goals before the talks with Google were reported.

The startup’s most recent funding round valued it at $12 billion, and the deal will nearly double the company’s valuation. Founded in 2020, Wiz has grown rapidly under the leadership of Rappaport, who planned an IPO as early as May. Eighteen months later, the company hit $100 million in annual recurring revenue, up from $350 million last year.

Wiz’s cloud security products include prevention, proactive detection and response, a product portfolio that attracts large companies and helps Google compete with other companies. Microsoftwhich also sells security software.

Alphabet’s cloud business faces growing competition from leaders Microsoft and Microsoft. Amazon. After years of heavy investment, the cloud unit will be profitable in 2023.

While Google Cloud has continued to grow in recent years, the unit, led by Chief Executive Thomas Kurian, has faced pressure to continue trying to capture business amid the artificial intelligence boom.

Google did not immediately respond to a request for comment.

Exits in the tech sector have been rare this year, with startups waiting for a more receptive market before going public and a challenging regulatory environment for acquisitions.

Index Ventures, Insight Partners, Lightspeed Venture Partners, Sequoia Capital and other venture investors who have raised billions of dollars in recent years will view the deal’s failure as disappointing.

Multibillion-dollar funds need to exit more than $10 billion to generate solid returns for their limited partners, which is rare, said PitchBook senior analyst Brendan Burke.

Wiz’s founders previously founded security startup Adallom, which raised funding from Sequoia Capital and Index and sold the business to Microsoft in 2015 for $320 million. explain Early investment in Wiz was a “no brainer.”

Shortly after Wiz launched, the coronavirus pandemic hit. Companies are adopting cloud-based software and infrastructure to help employees work remotely. The shift benefits Wiz, which can tag Amazon, Google, Microsoft and Oracle Public cloud.

Less than a year after its founding, Wiz announced the completion of a $100 million round of financing.

Sid Trivedi, an investor at Foundation Capital, told CNBC: “I think what was unique about Wiz early on was that it raised a lot of money from the beginning.”

In 2022, Google acquired the cybersecurity company Mandiant for $5.4 billion. The company ultimately sold the assets from the acquisition to Lenovo in 2014 for $2.9 billion. Google recently ended talks to acquire sales software maker HubSpot.

In an interview with CNBC’s Sara Eisen and Carl Quintanilla at the New York Stock Exchange last year, Eisen asked Rappaport if he would be willing to take Wiz public.

“Yes, of course,” he said. He smiled. “That’s why we’re here.”