Israeli-founded cyber startup set to be snapped up by Datadog in $1 billion deal

US-based cloud monitoring and security software firm Datadog is in advanced talks to buy Israeli-founded cybersecurity startup Upwind Security for as much as $1 billion to bolster its security offerings for cloud applications, a source familiar with the matter told The Times of Israel on Wednesday.

The terms of the acquisition have not been made public as the deal has not yet been finalized. Upwind and Datadog were not available for comment.

Headquartered in San Francisco with offices in Tel Aviv, Upwind was founded in 2022 by serial entrepreneur Amiram Shachar, together with Liran Polak, Lavi Ferdman and Tal Zuri, the same team that founded Israeli startup Spot.io sold to NetApp for $450 million in 2020. The startup is named after Shachar’s love of wing foiling, a water sport that combines elements of windsurfing, hydrofoiling and kitesurfing.

Upwind has developed a platform to protect businesses from malicious hackers by identifying risks and addressing their most critical vulnerabilities and threats to their applications and workloads while they are actively running in the cloud. The startup says its platform helps businesses manage alert noise, including false alarms triggered by detection tools, to understand and respond faster to actual threats and causes of security issues in their software systems.

With hybrid work now standard, sending entire enterprises and workers online, securing modern environments has become a challenge with the fast emergence and adoption of AI-powered tools and software by businesses and organizations as they move to cloud services.

The digital transformation and migration of businesses to cloud environments have been bolstering demand for solutions to protect critical and sensitive data as they face heightened network security risks, including sophisticated ransomware, malware and other breaches.

In December 2024, Upwind raised $100 million from investors at a company valuation of $900 million to expand operations across its offices in Israel, San Francisco, the UK and Iceland, and meet growing demand for protecting cloud applications. As part of the global expansion, Upwind is doubling its current workforce to about 300 employees in 2025.

The funding round was led by Craft Ventures, a venture capital firm co-founded by David Sacks with participation from new investors TCV and Alta Park Capital. Existing investors Greylock, Gili Raanan’s Cyberstarts, Leaders Fund, Cerca and Sheva, founded by former NBA player Omri Casspi, also participated in the financing round.

To date, the startup has raised a total of $180 million in funding. Among its customers are Wix, Bill.com, Ping Identity, Booking.com and Abnormal AI.

New York-based Datadog, which is traded on the Nasdaq with a market value of about $50 billion, bought Israeli startup Seekret in 2022 and local firm Ozcode in 2021.