Upwind raises $400 million at $3.8 billion after rejecting Datadog offer

Upwind, a San Francisco start-up that uses AI to protect companies' cloud systems, has raised $400 million in a Series C funding round at a valuation of $3.8 billion, after turning down an approach from the US monitoring company Datadog to buy it. The round, reported on Wednesday, October 28, 2026, was led by Bessemer Venture Partners, with existing investors including Greylock Partners and Craft Ventures taking part. Datadog's offer did not carry a meaningful premium over the price set by the new round, according to reports, so Upwind chose to stay independent.

Most large companies now run their software on cloud platforms such as those of Amazon, Microsoft and Google, rather than on their own servers. That shift has created a large market for cloud security: tools that find weak settings, exposed data and attacks across the many services a company rents. Upwind says it uses AI to watch what is actually running inside a company's cloud and flag threats as they happen. As with any company's description of its own product, that is the company's claim.

The decision to turn down a buyer is unusual for a start-up of Upwind's age, and it says something about the state of the market. Large security and infrastructure companies have been paying high prices to buy cloud security start-ups, because building the same tools themselves takes years. When a start-up can raise fresh money at a price close to what a buyer offers, its founders and investors have less reason to sell, and can wait for a larger deal or a stock market listing later.

The jump in value is also steep. According to reports, Upwind's valuation rose from $1.5 billion to $3.8 billion in about nine months, more than doubling. Investors pay such prices when they expect revenue to keep growing fast. The revenue figures in circulation come from people familiar with the company, not from Upwind, so they should be read as estimates.

For Indian founders and engineers in security software, the round is a marker of what global investors are willing to pay for. India has a growing number of cyber-security start-ups selling to companies abroad, and the Upwind deal shows that investors are rewarding fast revenue growth in cloud and AI security in particular.

Short-term: Upwind has more cash to hire, build products and sell to more customers, and its decision keeps one of the larger independent cloud security companies off the acquisition market for now.

Long-term: Analysts note that few cyber-security companies have gone public in recent years, so a sale to a larger company remains a likely outcome for Upwind at some point. Its higher valuation raises the price any future buyer would have to pay.

Who is affected: Companies that buy cloud security tools, rival start-ups raising money in the same field, large security and monitoring firms looking to buy, and engineers and founders in the cloud security industry, including those in India.

Questions and Answers