A cybersecurity startup says no to $3.8 billion
Rejecting an acquisition offer that matches its own valuation is a bold move, but not a new one.
The story
Upwind, a cloud security startup, raised $400 million at a $3.8 billion valuation, rejecting a Datadog acquisition offer that didn't exceed that valuation.
Source: techcrunch.com
Our reading
Upwind turned down a $3.8 billion offer from Datadog, which apparently didn’t think the startup was worth more than what venture capitalists already said it was. That’s like turning down a raise because your boss didn’t offer the exact amount you wanted, even though your colleagues got bigger ones.
The company now has a valuation that’s 40 times its annual revenue, which is the kind of math that makes investors feel like they’re playing a game of Monopoly with a deck of cards. If they keep growing, maybe they’ll be worth 80 times their revenue, just like Cyera, which is also a cybersecurity company that probably doesn’t need to be valued at 80 times anything.
Upwind’s CEO previously sold a company for $450 million, which is a lot, but not as much as the $3.8 billion they’re now worth. It’s like saying, ‘I’ll take the $450 million, but only if you promise to give me $3.8 billion later.’
