Cloud security startup Lacework is reportedly in talks to be acquired by Wiz, another player in the security industry. While the acquisition price is said to be in the range of $150-$200 million, the deal is not yet finalized and could still fall through. The acquisition is expected to be a technology-plus-talent-plus-customer play, as the two companies have relatively little competitive overlap. The specific terms of the deal, such as whether it would be in stock, cash, or a mix, are still unknown.
Wiz, known for its organic growth and ambition to become the world’s leading cloud security platform, has been actively engaged in discussions with various companies in the industry. The CEO and co-founder of Wiz, Assaf Rappaport, has expressed the company’s goal of achieving $1 billion in annual recurring revenue (ARR) before an IPO. However, Wiz’s current ARR stands at $350 million as of February 2024, so it needs to aggressively expand its capabilities to meet its target. On the other hand, Lacework has an ARR of approximately $100 million.
This potential acquisition reflects two significant trends in the security industry. Firstly, while security startups continue to attract substantial funding, some are struggling to justify their high valuations and are exploring their options as their funding runway nears its end. Lacework’s investors have been actively seeking potential buyers for the company. Secondly, there is a growing trend of consolidation in the industry, with players like Wiz emerging as consolidators. As Wiz aims to become a comprehensive cloud security solution provider, it has recently acquired Gem Security for $350 million.
Lacework, founded almost nine years ago in San Jose, California, has raised over $1.8 billion from investors. A significant portion of this funding, amounting to $1.3 billion, came from a late November 2021 funding round that valued the company at $8.3 billion. The acquisition of Lacework by Wiz demonstrates the ongoing consolidation and evolution within the security industry as companies strategically align their technology, talent, and customer bases for future growth and market dominance.
In conclusion, the potential acquisition of Lacework by Wiz highlights the consolidation happening in the security industry, with companies seeking to enhance their technological capabilities and expand their businesses. As security startups face valuation challenges, they are exploring acquisition opportunities to ensure their continued growth and success. Wiz, with its goal of hitting $1 billion in ARR, is actively pursuing strategic acquisitions to strengthen its position as a leading cloud security platform. This acquisition, if completed, will contribute to Wiz’s growth trajectory and further solidify its position in the market.
