In 2022 SentinelOne, an endpoint security firm, launched S Ventures, a $100 million fund to invest in enterprise cybersecurity startups.
Now it might just be acquired by one: cloud security startup Wiz claims it is assessing a potential acquisition of the NYSE-listed company.
Wiz, a cloud security specialist, was only founded in 2020.
Earlier this year it reached a valuation of over $10 billion – after boasting in August 2022 that it had become the fastest ever software company to scale from $1 million to $100 million in annual recurring revenue.
SentinelOne, meanwhile, was also valued at over $10 billion just 26 months earlier when it listed; breaking records itself with the highest-valued cybersecurity initial public offering (IPO) in history. Things change fast...
Whilst SentinelOne's revenues had grown to $133.3 million for its last reported quarter April 30, 2023, net losses hit $106 million for the same period and its market capitalisation was closer to $4.8 billion as The Stack published. SentinelOne faces stiff endpoint security competition not just from rivals like CrowdStrike, but from CIOs consolidating their technology stacks, with winners including heavyweights like Microsoft, which saw cybersecurity sales hit $20 billion annually earlier this year.
The economic backdrop has stung too: “Enterprises are taking a wait-and-see approach by deferring purchase decisions. While not entirely new, the impact from these conditions was more pronounced this quarter” as SentinelOne CEO Tomer Weingarten said on its last earnings call (June 2023), adding that “we were disappointed with some late-stage contract execution challenges on large deals…”
Wiz’s confirmation Friday that it is assessing a potential acquisition of SentinelOne comes less than six months after the two agreed a strategic partnership and integrations. It is early days and Wiz – which has been exceptionally canny at marketing – has yet to hire a bank to help it proceed.
If it happened, it would be a remarkable move by a young startup for a listed company. The discussions are a sign of just how fast things can change in two years. Wiz itself would be wise to take that into consideration.