Wiz Security: How a $6M Investment Yielded a 200x Return

Google’s Acquisition of Wiz: A Significant Payday for Investors

Alphabet, Google’s parent company, has announced a $32 billion all-cash acquisition of the cybersecurity startup, Wiz. This transaction is expected to generate substantial profits for the company’s initial investors.

Returns for Early Investors

Sequoia, a prominent venture capital firm, is projected to realize a $3 billion return on its investment, representing approximately a 25x multiple. This outcome signifies a considerable success for Sequoia’s limited partners.

However, the gains for Sequoia will be surpassed by those of Cyberstarts, an Israel-based VC firm that also backed Wiz early on.

Cyberstarts’ Exceptional Performance

In February 2020, Cyberstarts invested $6.4 million from its inaugural $54 million fund into Wiz’s seed round.

Currently, this fund holds a 4.1% ownership stake in Wiz. Consequently, it is anticipated to generate a remarkable $1.3 billion from the acquisition, according to sources familiar with the firm’s performance.

Furthermore, Cyberstarts previously executed secondary transactions, selling $120 million worth of Wiz shares. This brings the fund’s total return to $1.42 billion – an extraordinary 222x return on the initial investment.

Additional Investments and Future Potential

Cyberstarts also participated in subsequent funding rounds, investing an additional $40 million from its opportunity fund. These investments are now valued at $128 million, yielding a 3.2x return on invested capital.

Shai Goldman, a partner at Next Wave NYC, commented on X (formerly Twitter) that Cyberstarts is poised to achieve one of the highest returning funds in venture capital history. He highlighted that backing a firm’s first fund can be particularly rewarding.

The Founding of Cyberstarts

Cyberstarts was founded in 2018 by Gili Raanan, a former Sequoia general partner with nearly nine years of experience leading the firm’s Israel investment strategy.

The firm’s initial $54 million fund has already achieved a 26x multiple on its limited partner capital. This impressive performance doesn't even include potential returns from other portfolio companies, such as Island, which is reportedly raising capital at a $4.5 billion valuation.

Index Ventures’ Gains

Index Ventures, holding a 12% stake in Wiz, is expected to receive over $3.8 billion upon the completion of the sale, as reported by Reuters.

This acquisition underscores the significant financial opportunities within the cybersecurity sector and the potential for substantial returns for early-stage investors.