Wiz has decided to walk away from a massive $23 billion deal with Google, which would have been Google’s largest acquisition to date. The company’s co-founder, Assaf Rappaport, explained in a memo to employees that the decision was made due to concerns about antitrust issues and investor worries. Instead of being acquired, Wiz will now focus on its original plan of going public with an initial public offering (IPO) and reaching $1 billion in annual recurring revenue.
The potential deal with Google would have almost doubled Wiz’s $12 billion valuation from its previous funding round. Since its founding in 2020, Wiz has experienced rapid growth under Rappaport’s leadership, hitting $100 million in annual recurring revenue after just 18 months and reaching $350 million last year. The company’s cloud security products have been attractive to large organizations and could have helped Google compete with rivals like Microsoft in the security software market.
Alphabet’s cloud division has been facing stiff competition from Microsoft and Amazon, and the company’s cloud segment finally achieved profitability in 2023 after years of heavy investment. The pressure is on Google Cloud, led by CEO Thomas Kurian, to continue growing and capturing business opportunities in the booming AI industry.
Despite the setback of the failed acquisition, Wiz’s decision to pursue an IPO aligns with its original plans and goals. The collapse of the Google deal may be disappointing for Wiz’s venture backers, including Index Ventures, Insight Partners, Lightspeed Venture Partners, and Sequoia, who were hoping for a sizable return on their investments. In the technology industry, exits through acquisitions or IPOs have been relatively scarce this year, with startups facing market uncertainties and regulatory challenges.
Wiz’s founders have a successful track record in the security software industry, having previously built and sold a startup called Adallom to Microsoft for $320 million in 2015. Their decision to focus on an IPO reflects their confidence in the company’s potential to succeed as a publicly traded entity. The shift to remote work during the Covid pandemic has driven increased demand for cloud-based services, benefiting companies like Wiz that provide cloud security solutions.
Looking ahead, Wiz’s decision to go public could open up new opportunities for growth and expansion. While the Google deal may have fallen through, the company’s innovative products and strong market position could make it an attractive investment for public shareholders. As Wiz prepares for its IPO, the company will need to navigate the complexities of the public markets and continue to deliver value to customers and investors alike.