Wiz’s acquisition by Alphabet, the parent company of Google, for $32 billion in cash, is set to deliver substantial returns for the early-stage investors of the cybersecurity startup.
Sequoia, a prominent venture capital firm, is expected to receive $3 billion from the deal, representing approximately 25 times its initial investment in the company, according to a report by Bloomberg. Despite the significant profits for Sequoia’s limited partners, their percentage gain is anticipated to be smaller compared to another early investor in Wiz, Israel-based venture capital firm Cyberstarts.
Cyberstarts, which focuses on cybersecurity investments, contributed $6.4 million from its first $54 million fund to Wiz’s seed round in February 2020. Currently, the fund holds a 4.1% stake in Wiz, positioning it to earn $1.3 billion from the acquisition, as suggested by a source familiar with the firm’s outcomes. In addition, Cyberstarts has previously offloaded $120 million worth of Wiz shares in secondary transactions, increasing the fund’s total return to $1.42 billion—a notable 222-fold return on its original investment.
Moreover, Cyberstarts participated in subsequent funding rounds for Wiz, investing an additional $40 million from its opportunity fund. These investments are currently valued at $128 million, offering a more modest 3.2 times return on invested capital, as per information from a source knowledgeable about Cyberstarts’ performance shared with TechCrunch.
Shai Goldman, a partner at Next Wave NYC, commented on X (formerly Twitter) that Cyberstarts is likely to have one of the highest returning funds in venture capital history. He emphasized that this investment originated from their inaugural fund, serving as a reminder that a first fund can be exceptionally rewarding for limited partners.
Cyberstarts, when it launched its first fund in 2018, was not an average emerging venture capital manager. The firm was established by Gili Raanan, who formerly served nearly nine years as a general partner at Sequoia, where he led the company’s investment strategy in Israel.
The relatively small $54 million fund has already achieved a 26-fold return on its limited partner capital, excluding other potential exits like Island, a startup reportedly raising funds at a valuation of $4.5 billion.
Index Ventures, which holds a 12% ownership in Wiz, is set to gain over $3.8 billion once the transaction concludes, as reported by Reuters.
