Consolidation continues to shape the landscape of security as Lacework, a cloud security startup valued at $8.3 billion in its last funding round, is reportedly in discussions to be acquired by Wiz, another player in the security industry, for an estimated price of $150–$200 million.
Sources familiar with the negotiations have disclosed that both companies have signed a letter of intent, positioning the acquisition process at an intermediary stage. Despite operating within the realm of cloud security, there is a minimal competitive overlap between Lacework and Wiz, suggesting that the acquisition will likely focus on technology, talent, and customer base synergies. The specifics of the deal, such as whether it will involve stock, cash, or a combination of both, are still being uncovered.
With Wiz aiming to achieve $1 billion in annual recurring revenue before an IPO, the potential acquisition of Lacework, which reportedly maintains an ARR of around $100 million, aligns with Wiz’s growth strategy. The Information has also reported on the recent developments.
Reflecting a broader industry trend, the deal sheds light on two key aspects:
Firstly, security startups are attracting substantial funding, yet some are encountering challenges in justifying their high valuations, prompting strategic considerations as they approach the end of their funding runway. Lacework’s investors, including prominent names like Snowflake Ventures, GV, General Catalyst, and Tiger Global, have reportedly explored selling the company, leading to discussions with Wiz.
Secondly, amidst this landscape, Wiz emerges as a significant consolidator. With a valuation of approximately $10 billion, Wiz is positioning itself as a comprehensive cloud security solution provider on its path to the IPO. Following the recent acquisition of Gem Security for $350 million, Wiz’s M&A activities are poised to expand beyond Lacework.
A spokesperson from Wiz emphasized the company’s commitment to organic growth and consolidation efforts in the security industry, positioning itself as a leading cloud security platform:
“Wiz has experienced unprecedented organic growth since its inception, and we are dedicated to pushing this growth even further. Simultaneously, we recognize that consolidation is the future of the security industry and therefore are actively engaged in discussions with companies across the industry. We are always exploring compelling M&A opportunities that will enhance both our technological capabilities and business expansion, as we strive to build the world’s leading cloud security platform.”
Established almost a decade ago in San Jose, CA, Lacework has secured over $1.8 billion in funding over the years, with a substantial portion stemming from a late 2021 round that valued the company at $8.3 billion.
