Upwind, a cloud and AI cybersecurity startup, has raised $400 million in a Series C funding round at a $3.8 billion valuation, choosing to remain independent after reportedly walking away from acquisition discussions with Datadog. Announced on October 28, 2026, the round was led by Bessemer Venture Partners, with participation from existing investors including Greylock Partners and Craft Ventures. The funding brings Upwind’s total capital raised to more than $800 million.
The acquisition talks reportedly stalled because Datadog’s offer did not provide a sufficient premium over the $3.8 billion valuation established by investors. The decision comes as companies invest more heavily in securing cloud infrastructure, AI applications and autonomous agents. Upwind’s business focuses on monitoring live cloud workloads to identify exploitable vulnerabilities and detect threats while systems are running, rather than relying solely on periodic security scans.
Key Takeaways
- Funding: Upwind raised $400 million in a Series C round at a $3.8 billion valuation.
- Lead investor: Bessemer Venture Partners led the round, joined by existing backers and other investors.
- Datadog deal: The companies reportedly discussed an acquisition, but Upwind decided not to proceed with the offer.
- Business focus: Upwind provides runtime-focused cloud and AI security software.
- Growth: The startup’s valuation has risen significantly since its earlier funding rounds.
- Use of funds: The company plans to expand product development and its market presence.
- Industry trend: Growing use of cloud services and AI agents is increasing demand for real-time cybersecurity tools.
What Is Upwind, and What Does It Do?
Founded in 2022 by Amiram Shachar and his team, Upwind develops security software for organizations operating applications and workloads in cloud environments. Its platform helps security teams identify vulnerabilities, understand which weaknesses are reachable by attackers and detect suspicious activity in running systems.
Traditional security tools often rely on periodic scans, configuration checks or lists of known vulnerabilities. These methods remain useful, but they may generate alerts about weaknesses that are difficult to exploit in a particular environment. Runtime security adds information about what is actually happening inside a live application.
For example, a cloud application might contain a vulnerable software component. A conventional scan could flag the component, but runtime information can help determine whether the affected code is active, reachable and exposed to potentially malicious requests.
Upwind combines cloud workload information, application activity and security findings to help teams prioritize the risks that require attention. The company also targets AI infrastructure and agents, which can introduce new access paths and operational risks as organizations automate more tasks.
The company operates in a competitive market that includes established cybersecurity vendors and cloud security startups. Its challenge is to demonstrate that combining real-time context with vulnerability detection can help customers respond more effectively than fragmented security tools.
Why Did Upwind Walk Away From Datadog?
Datadog, a publicly traded software company known for monitoring applications and cloud infrastructure, reportedly explored acquiring Upwind.
According to TechCrunch, the acquisition discussions nearly disrupted Upwind’s latest funding round. A person familiar with the company said Datadog did not offer a premium above the $3.8 billion valuation established by the new investment round, prompting Upwind to remain independent.
Earlier reporting by The Information described Datadog’s offer as being close to $4 billion. Neither company’s reported discussions should be treated as a completed transaction or as confirmation that a definitive acquisition agreement was reached.
The decision reflects a common consideration for fast-growing startups: whether selling the business now offers greater value than continuing to scale independently.
For Upwind, accepting an acquisition would have transferred ownership and control to Datadog. Raising another funding round instead provides capital to expand the business while allowing its existing management and investors to retain a stake in its future.
The new valuation also gives Upwind a benchmark against which future financing or acquisition proposals may be evaluated. However, a private-market valuation is not the same as cash available to shareholders, and it does not guarantee the company will eventually sell for a higher price.
Upwind’s Funding History and Valuation
The $400 million round represents a major financing milestone for the startup.
| Funding milestone | Amount raised | Reported valuation |
|---|---|---|
| December 2024 round | $100 million | Approximately $900 million |
| January 2026 Series B | $250 million | Reported at $1.5 billion by TechCrunch |
| October 2026 Series C | $400 million | $3.8 billion |
| Total funding | More than $800 million | — |
Sources: Reuters and TechCrunch.
The latest valuation is more than twice the $1.5 billion figure reported for the January round. That increase suggests investors see substantial potential in Upwind’s position in cloud and AI security.
However, valuation growth alone does not establish profitability or long-term commercial success. Investors will also consider recurring revenue, customer retention, competition, operating costs and the company’s ability to turn funding into sustainable growth.
Who Invested in Upwind’s $400 Million Round?
Bessemer Venture Partners led the Series C. Existing investors participated alongside additional backers, according to the company’s funding announcement and Reuters reporting.
The investor group includes:
- Bessemer Venture Partners
- Greylock Partners
- Cyberstarts
- Craft Ventures
- Salesforce Ventures
- TCV
- Alta Park Capital
- Canapi Ventures
- Leaders Fund
- Penny Jar Capital
- Cerca Partners
- Swish Ventures
- Picture Capital
The participation of existing investors indicates continued financial backing from firms that already have exposure to the business. Canapi Ventures was identified as a new investor in Reuters’ reporting.
The funding is intended to support product development and commercial expansion. Upwind has not disclosed a detailed allocation of the $400 million across individual projects, so specific spending forecasts should not be assumed.
Why Cloud and AI Security Are Attracting Investment
Companies are moving more workloads to cloud platforms and connecting AI systems to business applications, databases and internal tools. These changes create new security requirements because software, identities and permissions can change quickly.
AI agents make the challenge more complex. An agent may be able to access information, call APIs, execute code or perform tasks on behalf of a user. If its permissions are excessive or its environment is compromised, the consequences can extend beyond the AI model itself.
Security teams therefore need to understand not only whether a vulnerability exists, but also how it connects to running workloads, sensitive data and potential attack paths.
Upwind’s runtime-focused approach is designed to help customers investigate those relationships and prioritize risks based on the context of active systems.
The broader market opportunity has also attracted established vendors. Companies such as Palo Alto Networks, CrowdStrike and Google offer cloud security capabilities, while other startups compete to provide visibility across cloud workloads and AI infrastructure.
This creates an opportunity for specialized vendors but also puts pressure on them to differentiate their products and prove that customers receive enough value to justify additional spending.
What the Funding Means for Upwind’s Future
The new capital gives Upwind additional resources to expand engineering, develop its security platform and reach more enterprise customers.
The company has also been investing in AI-related security capabilities as businesses deploy agents and other automated systems. This direction could help it address a growing need for tools that can monitor activity across traditional cloud workloads and newer AI-powered applications.
At the same time, the $3.8 billion valuation creates expectations. Upwind will need to maintain growth, demonstrate customer demand and compete with security providers that have larger product portfolios and established enterprise relationships.
Remaining independent also leaves the company with strategic choices. It can continue raising capital, pursue partnerships, expand through product development or consider acquisition discussions again in the future. Its latest decision does not rule out a sale at a later date.
The Bigger Picture
Upwind’s funding round reflects investor interest in cybersecurity companies that can protect increasingly complex cloud environments. As AI agents become more integrated into enterprise operations, security tools must account for live application behavior, access permissions and potential attack paths—not just static lists of vulnerabilities.
The reported Datadog discussions also show how quickly strategic interest can develop around companies operating in high-demand technology markets. For now, Upwind has chosen fresh funding and independence over the reported acquisition opportunity. Whether that decision creates more long-term value will depend on its execution, competitive position and ability to turn growing demand for cloud and AI security into durable revenue.
FAQs
1. How much did Upwind raise?
Upwind raised $400 million in its Series C funding round, announced on October 28, 2026. The round was led by Bessemer Venture Partners and valued the company at $3.8 billion.
2. Why did Upwind reject Datadog’s acquisition offer?
According to TechCrunch’s reporting, the offer did not provide a premium above Upwind’s $3.8 billion funding-round valuation. The company decided to continue operating independently. The detailed terms of the reported discussions have not been publicly confirmed by both parties.
3. What does Upwind do?
Upwind develops cloud and AI security software that uses runtime information to help organizations identify vulnerabilities, understand attack paths and detect threats in active workloads.
4. Who led Upwind’s Series C funding?
Bessemer Venture Partners led the round. Existing investors, including Greylock Partners and Craft Ventures, also participated, alongside other investors.
5. How will Upwind use the funding?
The company says the funding will support product development and commercial expansion. A detailed breakdown of spending has not been disclosed.
Looking Ahead
Upwind will now need to translate its new funding and higher valuation into stronger products, broader enterprise adoption and sustained financial growth. The next indicators to watch include revenue performance, customer expansion, new AI security capabilities and whether the company can distinguish itself in a crowded cloud security market.
The Datadog episode may not be the final word on Upwind’s strategic future. The startup can continue to scale independently while remaining a potential acquisition target, but its long-term value will depend on business performance rather than valuation alone. For investors and enterprise customers, the central question is whether Upwind can become a lasting security platform as cloud computing and AI-driven workloads evolve.
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