Noname Security, a cybersecurity startup that specializes in protecting APIs, is currently in advanced negotiations with Akamai Technologies for a potential acquisition deal worth $500 million. Although the sale price represents a significant discount from Noname’s previous valuation, the deal is expected to be a cash transaction, according to a source familiar with the matter. However, it’s important to note that the deal has not been finalized and could still undergo changes or even fall through.
Noname Security was founded in 2020 by Oz Golan and Shay Levi and has its headquarters in Palo Alto, although it has strong Israeli roots. Over the years, the startup has managed to raise an impressive $220 million from various venture investors. In fact, Noname’s last funding round in December 2021, led by Georgian and Lightspeed, valued the company at $1 billion. Notable investors who have backed Noname include Insight Partners, ForgePoint, Cyberstarts, Next47, and The Syndicate Group.
Despite the lower valuation in the potential acquisition deal, early-stage investors can still expect a substantial return on their investment. On the other hand, the deal is anticipated to provide later-stage investors, particularly those who participated in the last funding round, with a full return on their capital. While it may not meet their initial profit expectations from the optimistic days of 2021, when money flowed freely and valuations were high, it still offers a favorable outcome.
The current deal values Noname Security at roughly 15 times its annual recurring revenue, which is a promising indicator of the company’s value. If the acquisition goes through, Noname’s approximately 200 employees are expected to transition to Akamai Technologies.
When approached for comment, Akamai declined to provide any official statement. Meanwhile, a spokesperson from Noname Security adhered to their policy of refraining from commenting on rumors or speculation when contacted by TechCrunch.
In January, The Information reported that Noname was seeking to raise additional funds at a significantly reduced valuation. Subsequently, in February, Israeli news outlet Calcalist disclosed that Noname was engaged in negotiations with multiple potential buyers, including Akamai. These reports suggest that the cybersecurity startup has been exploring various avenues to secure its future growth and stability.
The current landscape in the venture industry has been challenging for many VC-backed companies that experienced a decline in valuations following the U.S. Federal Reserve’s decision to raise interest rates. As a result, many of these companies find themselves in a dual-track process, actively seeking both potential buyers and new funding rounds. Additionally, numerous later-stage VCs are now looking for liquidity after enduring over a year of an inactive IPO market. Consequently, the prevailing sentiment in the venture industry is that unless robust IPOs make a swift comeback, it may soon be an opportune time for M&A activities and bargain hunting.