Upwind Rejects Datadog Acquisition Bid to Secure $400 Million Series C at $3.8 Billion Valuation

Upwind, a San Francisco-based cybersecurity startup specializing in artificial intelligence-driven cloud infrastructure protection, has successfully closed a massive $400 million Series C funding round. The latest financing values the four-year-old enterprise at $3.8 billion. The round was led by Bessemer Venture Partners, with continued participation from existing backers, including Greylock Partners and Craft Ventures.

This latest influx of capital comes just nine months after Upwind closed its previous financing event—a $250 million round that valued the company at $1.5 billion in January 2026. The rapid succession of funding rounds underscores the extraordinary demand for advanced cloud security solutions as organizations worldwide grapple with an increasingly complex and hostile digital landscape.

However, the path to closing this latest $400 million round was not entirely straightforward. According to a person familiar with the matter, the transaction was months in the making and nearly fell apart entirely when publicly traded cloud monitoring giant Datadog stepped in with a late-stage acquisition attempt. Datadog, renowned for its extensive software observability tools that track how applications run and perform in real time, sought to absorb the fast-growing startup.

Ultimately, the acquisition talks collapsed because Datadog failed to offer a financial premium above the $3.8 billion valuation already established by the venture capital syndicate, the source said. Confident in its trajectory and standalone potential, Upwind opted to walk away from the buyout proposal and remain an independent entity. Representatives for both Upwind and Datadog have been approached for comment regarding the aborted acquisition talks.

The decision to reject Datadog’s advances highlights Upwind’s aggressive growth metrics and bullish internal outlook. Founded by entrepreneur Amiram Shachar—who previously built and successfully sold cloud spend management startup Spot.io to NetApp for $450 million—Upwind has scaled at a blistering pace. Industry observers note that the company has consistently added between $20 million and $30 million in annualized recurring revenue (ARR) each quarter.

Financial projections indicate that Upwind is on track to close the current year at roughly $90 million in ARR. Based on this forecast, both the venture capital investors participating in the Series C and Datadog evaluated the startup at a multiple exceeding 40 times its projected ARR. While a 40x multiple represents a substantial valuation metric by any historical software standard, it remains notably lower than the heated multiples seen elsewhere in the current cybersecurity market. For instance, fellow high-growth security startup Cyera captured market attention earlier this year when reporting revealed it was eyeing a $12 billion valuation at an astounding 80x ARR multiple, despite ongoing operating losses.

The intense investor appetite for cybersecurity assets aligns with broader macroeconomic and technological shifts. Venture capital leaders and industry analysts increasingly view cybersecurity as the next major monetization frontier for enterprise artificial intelligence. Tomasz Tunguz, a general partner at Theory Ventures, recently observed in a widely read industry blog analysis that cybersecurity is poised to become the third major wave of AI software that enterprise buyers will willingly pay for, trailing closely behind the initial waves of AI-powered coding tools and customer support automation.

By choosing to walk away from Datadog’s buyout offer, Upwind’s leadership team has signaled an underlying belief that the company’s independent value will eventually eclipse the $3.8 billion price tag that was on the table. Yet, industry dynamics suggest that an eventual corporate exit via acquisition remains a distinct possibility down the line. Given the relatively quiet market for initial public offerings among cybersecurity companies in recent years, a strategic sale often serves as the most viable and likely outcome for high-flying enterprise tech startups looking to deliver liquidity to their investors. According to sources familiar with the startup’s positioning, Upwind continues to attract significant acquisition interest from major technology players looking to bolster their cloud security arsenals.

At the core of Upwind’s market appeal is its distinct technological methodology. The startup focuses on what it describes as "runtime" security. Traditional cloud security tools often scan code repositories or static infrastructure configurations before deployment. In contrast, Upwind’s platform operates directly within active, running cloud environments. By monitoring active services in real time, the platform can instantly detect, alert, and actively remediate security threats, vulnerabilities, and active exploits as they happen, minimizing the window of opportunity for malicious actors.

As Upwind absorbs its latest $400 million war chest, the company is well-positioned to accelerate its research and development efforts, expand its global go-to-market operations, and further entrench its footprint in the competitive cloud security ecosystem. Whether the independent startup will eventually yield to future acquisition overtures or continue on a trajectory toward the public markets remains to be seen, but for now, Upwind has firmly established itself as one of the most formidable independent players in the modern cybersecurity landscape.