Israeli cybersecurity company Wiz has turned down Google’s $23 billion acquisition offer, which would have marked the tech giant’s largest purchase to date.
The startup is opting instead to proceed with plans for an initial public offering (IPO), according to CNBC.
In a memo to employees, Wiz co-founder Assaf Rappaport acknowledged the difficulty of declining such a significant offer. Sources close to the company mentioned concerns about antitrust issues and investor apprehensions as key factors in the decision, the report said.
Rappaport said Wiz would now concentrate on achieving its next goals: launching an IPO and reaching $1 billion in annual recurring revenue. These objectives had been on the company’s radar well before any discussions with Google began.
The proposed deal would have significantly increased Wiz’s valuation, almost doubling it from the $12 billion figure from its latest funding round.
Founded in 2020, Wiz has seen rapid growth under Rappaport’s leadership, aiming for an IPO as recently as May. The company reached $100 million in annual recurring revenue within 18 months and hit $350 million last year.
Wiz offers cloud security solutions that include prevention, active detection, and response, making it an attractive option for large enterprises and positioning it as a potential competitor to Microsoft’s security software.
Google’s cloud division, Alphabet’s cloud segment, has been facing stiff competition from Microsoft and Amazon. Despite achieving profitability in 2023 after years of significant investment, the division, led by CEO Thomas Kurian, is under pressure to maintain its growth, especially amid the AI boom.
The failed deal is likely to be a setback for venture capital firms such as Index Ventures, Insight Partners, Lightspeed Venture Partners, and Sequoia, which have invested heavily in Wiz.
The founders of Wiz, who previously built and sold the security startup Adallom to Microsoft for $320 million in 2015, have a strong track record. Early investment in Wiz was seen as an obvious choice by former Sequoia leader Doug Leone.
Wiz benefited from the pandemic-driven shift to cloud-based solutions, enabling companies to support remote work. The startup quickly raised $100 million less than a year after its inception.
Google’s acquisition history includes the $5.4 billion purchase of cybersecurity firm Mandiant in 2022 and its largest acquisition to date, the $12.5 billion purchase of Motorola in 2012, though Google later sold Motorola assets to Lenovo for $2.9 billion in 2014. Recently, Google ended talks to acquire sales software maker HubSpot.
