When Assaf Rappaport, Ami Luttwak, Yinon Costica, and Roy Reznik were riding a bus to their Israeli army base nearly a decade ago, they weren’t just swapping stories.
They were shaping what would become one of the biggest exits in venture capital history.
What started as a conversation among four Unit 8200 cyber operatives is now a $32 billion acquisition.
That is the largest ever for an Israeli-founded company and the biggest cybersecurity deal on record.
The Google-Wiz acquisition is more than just a transaction; it’s a statement about the future of Google as a company, the future cloud, AI, multicloud security, as well as the future of Venture Capital.
Who are the latest multi-billionaire founders?
Wiz wasn’t built in a Silicon Valley garage. It was forged in the intelligence corridors of Israel’s elite Unit 8200, a division famous for producing entrepreneurs who went on to found companies like Palo Alto Networks and CyberArk.
Rappaport, Wiz’s CEO, is no stranger to big exits. In 2015, he sold his previous venture, Adallom, to Microsoft for $320 million, later leading Azure’s cloud security group.
The Wiz story officially began in 2020, right as the Covid-19 pandemic reshaped how companies viewed cloud computing.
With businesses scrambling to shift online and secure sprawling hybrid infrastructures, Wiz’s multicloud security platform, which is designed to monitor and protect cloud environments, quickly found its place.
In less than five years, the company racked up a blue-chip client roster including BMW, Salesforce, Slack, and DocuSign.
By early 2024, Wiz was valued at $12 billion following a $1 billion funding round.
Last year, Google valued Wiz at $23 billion, in a deal that later broke down.
It was reported that investors persuaded the founders at the time to reject Google’s offer over fears that the US Government would block the deal anyway.
More recent reports suggest that the founders never really let go of the idea of being acquired by Google.
They kept touch with Sundar Pichai, Google’s CEO.
They even hired a CFO with M&A experience while engaging Goldman Sachs to position themselves for a potential sale.
Now it looks as if their big moment has come.
With the potential $32 cash deal that would see the 4 co-founders who each own just under 10% of Wiz, make about ~$3 billion each from this deal.
Why did Google pay a record price?
Now from the surface, this deal may look as a comfortable strategic play, but the truth is that Google is under pressure.
While AWS dominates the cloud infrastructure market with a 30% share and Microsoft Azure holding 21%, Google Cloud sits at just 12%.
The company has struggled to convince mid- and large-sized enterprises to bet on its platform alone.
This deal is Google’s response to that gap.
Wiz offers something that Google doesn’t fully have: a respected, fast-growing security platform that integrates seamlessly with AWS, Azure, Oracle Cloud, and others.
Unlike most Big Tech acquisitions, Wiz will continue to operate as an independent unit within Google Cloud, offering its services across competing cloud platforms, according to their memo.
But the deal comes at a steep price tag. With Wiz reporting around $500 million in revenue last year, its $32 billion acquisition comes at about 45-60 times ARR.
Public peers like CrowdStrike, CyberArk and Zscaler trade at around 22, 16 and 12 times ARR, respectively.
This premium highlights Google’s urgency to strengthen its hand in the cloud security race, and to better position itself in the broader battle over AI infrastructure.
It also shows how Google’s lack of an alternative acquisition target with Wiz’s positioning and velocity.
To put it into perspective: Once confirmed, this deal will be the largest cybersecurity acquisition globally, the biggest acquisition of a VC-backed startup, as well as the largest acquisition of an Israeli-founded company, dwarfing Google’s 2013 $1.15 billion Waze purchase nearly thirty-fold.
The Venture Capital perspective
This is a also defining moment for the venture capital world. Wiz was backed by some of the industry’s most elite funds, including Sequoia Capital, Insight Partners, Andreessen Horowitz, and Index Ventures. For these investors, this deal will generate outsized returns in a market that has seen valuations compress over the past 18 months. Another bright example of the “Power Law”.
It’s also a validation of Israel’s venture ecosystem. The deal is expected to set a precedent for future mega-exits out of Israel. Unit 8200’s reputation for producing top-tier cyber talent continues to pay dividends for both local investors and foreign funds with exposure to Israeli startups.
And then there’s the tax angle. Israel stands to collect roughly $4 billion from this transaction, equivalent to around 0.6% of the country’s GDP, providing a windfall at a time when the nation faces escalating defence expenditures due to ongoing regional conflict.
The bigger picture: Google’s AI and cloud dilemma
There’s more beneath the surface. Google is not just battling AWS and Microsoft in cloud infrastructure but also racing against them in AI.
OpenAI’s entire operation runs on Microsoft’s Azure, while Amazon is making headway with a mix of open-source (Llama) and proprietary models (Claude). Google, despite creating TensorFlow and pioneering many AI advances, is falling behind in terms of platform usage.
Wiz, while primarily a cybersecurity firm, gives Google a foothold in the architecture of AI infrastructure.
As AI workloads diversify across multiple cloud environments, customers will need security platforms that are flexible, scalable, and cloud-agnostic. That’s precisely where Wiz fits.
This is also why Google has accepted that Wiz will continue working with competitors like AWS and Microsoft.
Locking Wiz into Google Cloud would limit its appeal and stifle its growth.
Instead, Google is betting on multicloud tolerance as a strategic advantage, hoping it will act as a Trojan horse to get Google Cloud products deeper into Fortune 500 enterprises.
Is this a smart move or a sign of desperation?
The scepticism from markets was immediate. Alphabet shares fell by 5% on the day of the announcement.
Although it recouped some losses later, Alphabet’s stock is still underperforming broader Big Tech indices.
Some analysts view this as an overpayment, especially considering Wiz’s unprofitable status and uncertain revenue growth beyond its current ARR.
Others argue that Wiz’s unique position in securing cloud-native and AI-heavy environments makes this a necessary long-term play.
The $3.2 billion break fee baked into the deal suggests Google anticipates potential regulatory hurdles, even in the current more business-friendly US environment under President Trump.
The timing is indeed noteworthy.
The revived negotiations came in the wake of Lina Khan’s departure from the Federal Trade Commission, whose tenure was marked by a tough stance on blocking Big Tech mergers.
Some believe Khan’s exit may have cleared the path for Alphabet to reignite talks and close the deal.
Still, regulatory uncertainty remains. While Alphabet hopes the FTC will now take a softer line, new FTC Chairman Andrew Ferguson has already indicated that Big Tech will remain under scrutiny.
Ultimately, Google now faces the burden of proving that this deal isn’t just about filling a hole in its cloud offering but about anchoring itself in the future of AI-powered, multicloud security.
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