Upwind Raises $400 Million Series C at $3.8 Billion Valuation After Acquisition Talks with Datadog Fall Through

Upwind, a San Francisco-based startup specializing in AI-driven protection for cloud-native environments, has closed a $400 million Series C round at a $3.8 billion valuation. The round was led by Bessemer Venture Partners with participation from Greylock Partners and Craft Ventures, along with existing backers. The funding comes just nine months after Upwind’s prior financing of $250 million at a $1.5 billion valuation. The deal nearly collapsed when Datadog explored a possible purchase, but the two sides couldn’t reach a premium above the $3.8 billion valuation set by venture investors, leaving Upwind independent for now.

Since its four-year inception, Upwind has seen rapid growth amid climbing AI-driven cybersecurity threats, adding roughly $20 million to $30 million in annualized recurring revenue each quarter and aiming to finish the year around $90 million ARR, according to people familiar with the numbers. That implies investors valued the company at more than 40 times forecast ARR, a common software pricing metric, though well below the 80x ARR seen by Cyera, another fast-growing cybersecurity player noted by TechCrunch earlier this year. Analysts and insiders see cybersecurity as the next major wave of AI software adoption, following AI coding tools and support applications.

Upwind’s leadership, including founder Amiram Shachar—who previously sold his cloud spend management startup Spot.io to NetApp for $450 million—believes the company will ultimately be worth more than the current valuation. The company’s approach, described as runtime security, focuses on real-time threat alerts and remediation for active services. Even with the acquisition talks, Upwind remains an attractive target, and interest in the startup persists. TechCrunch reached out to Upwind and Datadog for comment.