Upwind raises $400 million after rejecting Datadog takeover offer

Cloud security startup Upwind has secured $400 million in Series C funding at a valuation of $3.8 billion after choosing not to sell to Datadog. Bessemer Ventures led the financing, joined by returning investors including Greylock Partners and Craft Ventures.

Datadog’s takeover approach almost derailed the funding process, which had been underway for months, a person with knowledge of Upwind said. The proposed purchase price did not exceed the valuation offered by venture investors, prompting Upwind to remain independent, the person said. Datadog provides publicly traded software-monitoring tools.

The financing follows a $250 million round completed nine months earlier that valued Upwind at $1.5 billion. A person familiar with its finances said the startup has been adding between $20 million and $30 million in annualized recurring revenue each quarter.

Based in San Francisco, the four-year-old company uses AI to protect cloud infrastructure. Upwind describes its method as runtime security, detecting and addressing attacks and vulnerabilities while services are operating.

Founder Amiram Shachar previously sold Spot.io, a startup focused on managing cloud spending, to NetApp for $450 million. Upwind still attracts interest from potential buyers, a person with knowledge of the company said.