In the ever-evolving world of security, consolidation is an ongoing trend. Inside sources have revealed that Lacework, a successful cloud security startup with a post-money valuation of $8.3 billion, is currently in talks to be acquired by fellow security player, Wiz. The proposed acquisition price? A mere $150-200 million.
Insiders familiar with the negotiations have shared that a letter of intent has already been signed between the two companies, but the talks are still ongoing and the deal may not ultimately come to fruition. Although both businesses operate in the broader realm of cloud security, there is reportedly little competition between them, indicating that this acquisition would likely be a strategic move to combine technology, talent, and customer bases. Details on the deal, such as whether it will involve stock or cash, are still being uncovered.
Wiz has publicly stated its goal to reach $1 billion in annual recurring revenue before its planned IPO, with a target date of 2025. However, with only $350 million in ARR announced in February 2024, the company is clearly looking to accelerate growth through acquisitions. Lacework, on the other hand, is said to have around $100 million in ARR.
The Information has also reported on these developments.
This prospective acquisition highlights a larger trend in the security industry.
Part One: High Valuations and Tough Decisions
Startups in the security sector continue to garner significant interest from investors. However, as some of these companies approach the end of their funding runway, they are struggling to justify their lofty valuations and seeking options for their future.
According to sources, Lacework’s list of investors, which includes major names such as Snowflake Ventures, GV, General Catalyst, and Tiger Global, have been actively shopping the company around. This is how Wiz came into the picture as a potential buyer.
It’s worth noting that Lacework is not the only security business seeing a valuation adjustment. Just last week, TechCrunch reported that Noname was in talks to be acquired by Akamai for $500 million, after previously being valued at $1 billion.
Part Two: The Rise of Consolidators
As the consolidation of security companies continues, some players are emerging as key players in this process. One such player is Wiz, which currently boasts a valuation of around $10 billion.
With its sights set on an IPO, Wiz is positioning itself as a comprehensive solution for all things related to cloud security. Just this month, the company acquired Gem Security for $350 million, and it seems that Lacework may not be the last addition to their portfolio.
“Wiz has experienced unprecedented organic growth since its inception, and we are dedicated to pushing this growth even further,” a Wiz spokesperson stated. “Simultaneously, we recognize that consolidation is the future of the security industry and therefore are actively engaged in discussions with companies across the industry. We are always exploring compelling M&A opportunities that will enhance both our technological capabilities and business expansion, as we strive to build the world’s leading cloud security platform.”
