Highlights:

  • Lacework provides a cloud-native application protection platform that offers build-time-to-runtime threat detection, behavioral anomaly detection, and cloud compliance across multicloud environments, workloads, containers, and Kubernetes.
  • Wiz has maintained a pattern of acquiring other companies. Its previous acquisitions encompass cybersecurity firms Raftt for an estimated USD 40 million to USD 50 million in December and Gem Security for a reported USD 350 million on April 10.

Cloud security firm Wiz Inc. is reportedly in discussions to acquire rival cloud security startup Lacework Inc. for approximately USD 150 million to USD 200 million, a figure significantly lower than Lacework’s valuation of USD 8.3 billion from its last funding round.

Who broke the story is less clear than the basic facts, with a famous digital newspaper, The Information, and Calcalist all claiming credit, but the core fact between the three is that Lacework is on the market for a lot less than it was once valued at.

Calcalist reports that a letter of intent of Wiz Inc. acquisition negotiations between Lacework. If the deal is finalized, Lacework’s USD 800 million cash reserves will be distributed among the company’s investors.

Established in 2015, Lacework provides a cloud-native application protection platform that offers build-time-to-runtime threat detection, behavioral anomaly detection, and cloud compliance across multicloud environments, workloads, containers, and Kubernetes.
The platform is specifically engineered to secure cloud environments, encompassing Amazon Web Services Inc., Microsoft Corp.’s Azure, Google LLC Cloud, private data centers, and hybrid environments.

Among its features, Lacework offers a breach detection and investigation tool that furnishes details on the timing and methodology of a breach, including the users, machines, and applications implicated in the breach. It also provides the Polygraph Data Platform, a zero-touch breach detection system that autonomously tags workloads and monitors application behaviors to issue alerts upon detecting anomalies.

Ahead of its potential acquisition, Lacework had amassed an impressive USD 1.9 billion in funding, according to Tracxn. Investors include Sutter Hill Ventures LP, Altimeter Capital Management LLC, Tiger Global Management LLC, Durable Capital Partners LP, D1 Capital Partners LP, Coatue Management LLC, General Catalyst Group Management LLC, Dragoneer Investment Group LLC, XN-Ventures LLC, Franklin Templeton Investments, Liberty Global Ventures Holding BV, Morgan Stanley, and Snowflake Inc.

The pressing query of the moment is: How does a company that has garnered USD 1.9 billion in funding find itself on the market for a mere USD 150 million to USD 200 million?

The initial indication that Lacework might face challenges surfaced in May 2022, when the company disclosed plans to reduce its workforce by 20%. Significantly, this occurred before the post-COVID slowdown and the subsequent job reductions witnessed across numerous companies. Lacework’s decision to implement workforce cuts preceded most of its peers, although it’s not alone.

Setting aside the layoffs, there’s a lack of clarity regarding why Lacework is sold for such a comparatively small sum. With a reported annual recurring revenue of USD 100 million, the modest size of the deal raises questions.

One evident thing is that it signifies market consolidation. According to Calcalist, the two companies were competitors, suggesting no overlap in their customer base. Should the deal be finalized, Lacework’s 600 customers could potentially transition to becoming customers of Wiz.

Wiz Inc. acquisition negotiations extend to other companies as well. Its previous acquisitions encompass cybersecurity firms Raftt for an estimated USD 40 million to USD 50 million in December and Gem Security for a reported USD 350 million on April 10. The company reportedly sought to raise an additional USD 800 million in funding, targeting a USD 10 billion valuation as of March.