Upwind Secures $400M Series C at $3.8B Valuation After Rejecting Datadog Offer

Upwind, a San Francisco-based company that applies artificial intelligence to protect cloud infrastructure, announced a $400 million Series C financing that values the business at $3.8 billion. The round was led by Bessemer Venture Partners and included existing backers Greylock Partners and Craft Ventures. The capital infusion comes less than a year after the startup closed a $250 million round at a $1.5 billion valuation, underscoring rapid growth and investor confidence.

The new funding was in the works for several months and almost collapsed when Datadog, a publicly traded observability platform, expressed interest in acquiring Upwind. According to a source familiar with the negotiations, Datadog did not propose a premium above the $3.8 billion price set by the venture capital investors, prompting Upwind’s leadership to decline the offer and remain independent. The decision reflects a belief that the company’s future value will exceed the purchase price on the table.

Upwind’s financial trajectory supports that optimism. The four-year-old startup has been adding between $20 million and $30 million in annualized recurring revenue each quarter and is projected to finish the year with roughly $90 million in ARR. At the $3.8 billion valuation, the implied multiple is just over 40 times forecast ARR, a figure that sits well below the 80-times ARR multiple recorded by fellow cybersecurity firm Cyera earlier this year. The relatively modest multiple suggests that investors see a sustainable growth path rather than a speculative bubble.

Industry observers view AI-enabled cybersecurity as the next major wave of enterprise software spending, following AI-driven development tools and customer-support solutions. Tomasz Tunguz, a general partner at Theory Ventures, recently argued that companies will increasingly allocate budgets to protect AI-powered workloads, positioning startups like Upwind at the forefront of that demand. For founders, the Upwind case illustrates how a clear product niche and strong growth metrics can command high valuations even when a strategic acquirer offers a cash exit.

Upwind was founded by Amiram Shachar, who previously sold his cloud-spend management company Spot.io to NetApp for $450 million. The firm markets its technology as “runtime” security, delivering real-time alerts and remediation for active services. While the company continues to attract acquisition interest, insiders suggest that an eventual sale remains the most probable exit scenario given the limited number of cybersecurity IPOs in recent years. The fresh capital will likely be used to accelerate product development, expand the sales force, and deepen market penetration as AI-related threats intensify.