Upwind, a San Francisco-based cloud security startup specializing in AI-driven runtime protection, recently secured $400 million in a Series C funding round valuing the company at $3.8 billion. This financing, led by Bessemer Venture Partners and joined by existing investors like Greylock Partners and Craft Ventures, marks substantial growth since its previous $250 million raise at a $1.5 billion valuation just nine months ago. The company’s rapid revenue expansion, adding $20 million to $30 million in annual recurring revenue each quarter and expected to reach around $90 million by year-end, underpins this significant valuation.

The path to this funding was nearly derailed after Upwind declined an acquisition proposal from Datadog, a publicly traded observability software provider. Datadog’s offer matched the $3.8 billion valuation rather than providing a premium, leading Upwind to prioritize independence and long-term growth potential over a sale. The decision highlights Upwind’s confidence in the market for AI-enhanced cybersecurity, which is increasingly recognized as a critical area following waves driven by AI coding tools and customer support platforms.

Upwind’s founder, Amiram Shachar, brings notable experience to the company, having previously sold his former startup Spot.io to NetApp for $450 million. Upwind’s approach focuses on mitigating security threats in real time during active service operation, an area referred to as “runtime” security. The company continues to attract acquisition interest despite its choice to remain independent, reflecting strong demand in the industry though a public offering remains uncertain given recent trends in cybersecurity IPOs.

Overall, Upwind’s fresh capital injection and bold move away from acquisition underscore its ambition to cement a leading role in the evolving cybersecurity landscape. The $3.8 billion valuation reflects an estimated 40 times projected annual recurring revenue, a notable multiple within the sector. The company’s trajectory points toward continued innovation and expansion as cybersecurity becomes a pivotal component of AI-driven enterprise software solutions.