The venture capital firms poised for a potentially massive Wiz payday
The Wiz of DPI
Google’s parent Alphabet is in talks to acquire the cyber security start-up Wiz in a $23bn deal that would mark its largest takeover.
If a deal is agreed, it would tee up venture capitalists for one of their biggest windfalls in history — and at a time when they have had difficulty exiting investments.
Founded just four years ago by Israelis who served in an elite military cyber intelligence unit called 8200 and previously sold a start-up to Microsoft, Wiz has raised around $2bn in funding from VC funds.
Some of those investors are now eyeing multibillion-dollar paydays if the Alphabet acquisition goes through.
Winners would include VC funds such as Index — the company’s largest shareholder — alongside Sequoia, Insight and the Israeli early-stage fund Cyberstarts.
The company’s four co-founders led by chief executive Assaf Rappaport also each hold a roughly 10 per cent stake, according to a person familiar with the matter.
Wiz’s growth is head-spinning. DD’s Ivan Levingston and George Hammond broke the news of the company’s investment round earlier this year, in what turned out to be a $1bn fundraising at a $12bn valuation in May.
If the Google deal goes through, that would double its valuation in just two months.
Before the VCs start writing those celebratory LinkedIn posts though, they may want to wait for any potential deal to close.
The last time VCs — including Index — were ready for a massive acquisition, it was Adobe’s $20bn takeover of the venture-backed product design software company Figma. However, that deal came under scrutiny from competition regulators and was abandoned in December.
The possible Wiz-Alphabet deal has already attracted scrutiny on competition grounds from government officials even before being agreed.
“Seems like this deal would be one for the antitrust textbooks,” US Senator Richard Blumenthal posted on social media. “It deserves exacting scrutiny.”