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Wiz, a rapidly growing cybersecurity startup, has decided to walk away from a $23 billion acquisition offer from Google, choosing instead to pursue an initial public offering (IPO) as previously planned. The deal, which would have been Google’s largest-ever acquisition, was declined due to considerations around antitrust issues and investor concerns, according to a source familiar with the situation.
In a memo to employees obtained by CNBC, Wiz co-founder Assaf Rappaport expressed the difficulty of turning down such a significant offer. “Saying no to such humbling offers is tough,” Rappaport wrote. He emphasized the company’s commitment to achieving its next major goals: a public listing and reaching $1 billion in annual recurring revenue. These milestones had been targeted before the acquisition talks with Google emerged.
The proposed acquisition would have significantly increased Wiz’s valuation from its most recent $12 billion, nearly doubling the company’s worth. Founded in 2020, Wiz has seen rapid growth under Rappaport’s leadership. The company reached $100 million in annual recurring revenue within its first 18 months and reported $350 million last year.
Wiz’s suite of cloud security products, which includes prevention, active detection, and response services, has attracted significant interest from large corporations. The company’s technology would have bolstered Google’s competitive stance against Microsoft in the security software market.
Google’s cloud division, led by CEO Thomas Kurian, has been under pressure to maintain growth amidst stiff competition from industry leaders Microsoft and Amazon. While Google Cloud achieved profitability in 2023, the unit continues to face challenges in expanding its market share, particularly in the context of the booming artificial intelligence sector.
Google did not immediately respond to requests for comment on the matter.
The tech industry has seen few significant exits this year, with many startups delaying IPOs due to uncertain market conditions and regulatory hurdles complicating acquisitions. The collapse of the Wiz-Google transaction may disappoint venture capital firms like Index Ventures, Insight Partners, Lightspeed Venture Partners, and Sequoia, which have invested heavily in the startup. These firms require substantial exits to deliver significant returns to their investors, a challenging prospect in the current environment.
Wiz’s founders have a track record of successful ventures, having previously built and sold the security startup Adallom to Microsoft for $320 million in 2015. The company’s early success with Wiz, including a $100 million funding round announced less than a year after its inception, attracted significant investor interest.
The decision to pursue an IPO aligns with Rappaport’s public statements about taking the company public. In a previous interview at the New York Stock Exchange, Rappaport affirmed his intentions, humorously noting, “That’s why we’re here.”
As the company prepares for its public debut, Wiz continues to benefit from the shift to cloud-based software and infrastructure, a trend accelerated by the COVID-19 pandemic. The startup’s capabilities in identifying security vulnerabilities across major public cloud platforms like Amazon, Google, Microsoft, and Oracle have positioned it as a key player in the cybersecurity landscape.
This decision marks another chapter in Google’s acquisition history, following its $5.4 billion purchase of cybersecurity firm Mandiant in 2022 and the $12.5 billion acquisition of Motorola in 2012, which it later partially divested. The tech giant recently ended talks to acquire sales software company HubSpot, reflecting a cautious approach to large-scale acquisitions amid a complex regulatory environment.