It’s hard to be disappointed by the hypothetical $23 billion that Google parent Alphabet is reportedly willing to pay for four-year-old Israeli company Wiz. However, some have expressed surprising displeasure. The feeling is “very good, but not great”. This conversation revolves around the missed opportunity for an IPO and the loss of an Israeli giant that will no longer grow locally. In addition, if the successful cyber company had been registered in Israel, the transaction would have generated higher revenue for the state treasury.
Despite these concerns, Israel could not have dreamed of a more joyous and fundamental event for its high-tech economy than the departure of the Wiz. Even if Wiz’s intellectual property is registered in the US, and even if it will no longer issue shares and be incorporated outside of Israel as a US company, Wiz remains a phenomenal Israeli success story.
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Wiz CEO Assaf Rappapot and CEO Dali Rajic.
(Photo: Ohad Kav)
The price Google is willing to pay for Wiz sets a new standard for revenue multipliers. This can be seen when comparing the levels of multipliers at which Israeli cyber industry giants such as Check Point and Palo Alto trade. Such a sale also puts Israel back on the map, signaling that there are not just unicorns on paper, but real giant companies. It will deepen Google’s presence and commitment to Israel and, in the future, will also produce a new generation of entrepreneurs who will leave the Wiz to create the next wave of startups. Furthermore, there is the immediate financial benefit. Even if it could be bigger, the deal is expected to result in at least $2 billion in taxes paid by Wiz’s Israeli founders and employees for selling their shares to Google.
According to estimates, the four founders each own about 10% of Wiz’s stock, and hundreds of Israeli employees together hold several percent more. This also sends a message to the State of Israel, which has recently begun to lose its startups from registering in the US: if the state wants to benefit from more exits, it must make efforts to keep here high technology companies.
Ironically, Wiz’s founders represent everything the current government hates: young liberals from the center of the country who fiercely opposed the justice overhaul and weren’t afraid to voice their opposition. They served important roles in the IDF, though not in combat, and are essentially leftists. CEO Assaf Rappaport, CTO Ami Luttwak, VP Product Yinon Costica, and VP R&D Roy Reznik are four 40-year-old “idiots” who met over 20 years ago during their military service in the IDF technology units. They founded Adallom, which was sold to Microsoft for $320 million and formed the basis for Microsoft’s cyber division. Armed with the experience and confidence of the world’s biggest and most respected investors, they went on to found Wiz, embodying Startup Nation on steroids – everything fast and big.
Now, the exit is coming very quickly and with an amount not usually associated with companies at the beginning of their journey with revenues in the hundreds of millions of dollars. At Wiz, the team didn’t dream of this kind of exit, as they often talked about an IPO. Rappaport and his partners look to entrepreneurs like Gil Shwed, CEO and co-founder of Check Point, and Nir Zuk, founder of Palo Alto Networks, as role models.
Digging deeper, it’s clear who envisioned the current deal and likely pushed for it to close, in part through the Wall Street Journal leak that revealed contacts between Google and Wiz on Sunday night. These are the funds invested in Wiz. Figures familiar with Silicon Valley and Wall Street point to Andreessen Horowitz’s surprise entry into the latest investment round at a $12 billion valuation just two months ago. Andreessen Horowitz, one of the largest and most successful venture capital funds in the world, led the round in which the Israeli company raised approximately $1 billion, in order to provide breathing space and means to implement its strategy of expansion.
This was an unusual investment for Andreessen Horowitz on two levels – the first in Israel and one of the few made at this stage of the company’s life. The fund typically likes to invest in companies at much earlier stages. When you go in with a $12 billion investment, a quick and significant return is expected. Two months ago, an IPO was hard to imagine, and the question now is what the fund knew or what plan of action it had in mind when they decided to invest in Wiz. It’s possible that the Wall Street Journal leak was intended to pressure the Wiz founders into agreeing to the sale to Google now instead of insisting on a future bid. Here Rappaport and his partners were first exposed to the other side – with the big and famous investors, they set the tone. In the case of Wiz, these include some of the largest and most powerful funds in the world: Sequoia Capital, Index Ventures, Lightspeed, Insight Partners and Blackstone.
Why don’t funds want to wait for IPO? They understand from their wealth of experience what the founders of Wiz, despite their genius, understand less – how things work on Wall Street. Silicon Valley may take companies far, but Wall Street is where the first encounter with real money takes place. This includes money from the American public investing directly, unlike the “other people’s money” (OPM) common on the West Coast. Even if institutional investors are involved, their investment oversight is much stricter. Recall WeWork’s failed IPO attempt to understand the gap between these types of money.
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Marc Andreessen.
(Photo: Bloomberg/ David Paul Morris)
The Wiz, of course, is no WeWork. It has a great product, a strong brand and no debt, but it’s still far from ready for an IPO. To reach the rating it is currently receiving from Google, it will have to wait a few more years. Wiz understood this, hence the series of publications about attempts to acquire relatively large companies such as SentinelOne or Lacework. The idea was to improve the technological solution and create a foothold in additional areas. In the end, Wiz settled on smaller acquisitions, starting with Israel’s Gem Security for $350 million a few months ago.
According to the data it publishes, Wiz is growing very fast and this year it will reach an annual revenue rate (ARR) of about $350 million, although this is not revenue according to accounting standards and the actual numbers are much lower. In the cyber market, Wiz is known to lose about $2 for every $1 in sales, which is reasonable for a new company capturing market share at penetration prices. Competitors note that Wiz offers floor prices with discounts of up to 97%, almost for free. For a Wall Street IPO, especially in the current era where money is no longer free, that gap between revenue and lack of profitability is too big. Wiz understands this and wants to improve profitability, but this is a complex task. Interestingly, the company does not yet have a CFO function.
Despite Wiz’s high praise in the apparent deal with Google, it has only been selling its products for about two years. It is now in the phase of renewing contracts for the first time and wants to raise prices. For this role, Dali Rajic was brought in earlier this year as President and COO, having previously served in the same roles at Zscaler, a successful US cyber company. Zscaler, a model for Wiz, is a cloud company that went public in 2018 and peaked at a $50 billion valuation in 2021. However, it has since fallen and now trades at a $30 billion valuation, not far off Wiz is getting into a deal with Google.
Another weight hanging over Wiz’s head is the lawsuit by Israeli rival Orca, founded by Check Point veterans. Orca claimed in a lawsuit filed about a year ago that Wiz copied its technology. Wiz tried to have the lawsuit dismissed, but the US court refused and announced a month ago that the case would go to a jury trial starting on December 7, 2025. Such lawsuits are undesirable in IPO prospectuses, but manageable by a giant like Google.