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Alphabet's $32 Billion Wiz Deal Set to Bring Windfall to VC Investors

On March 18, venture capital firms that invested in cybersecurity company Wiz, recently acquired by Google's parent Alphabet for $32 billion, are poised to see returns as high as 200 times their investment, with notable investors such as Sequoia Capital, Cyberstarts, and Index Ventures among them.

The acquisition marks a significant success for approximately 25 firms on Wiz's shareholder list, a rare accomplishment due to recent high interest rates and strict antitrust regulations limiting exit opportunities.

Key beneficiaries include early backers who consistently invested in Wiz, showcasing the principle in venture capital where a few investments yield significant returns. For instance, Israel-based Cyberstarts co-led a $21 million seed round in Wiz in February 2020, valuing the company at roughly $67 million post-investment.

Cyberstarts' substantial returns were highlighted by their initial $6.4 million investment, now valued at about $1.3 billion—a return exceeding 200 times their investment within five years, emblematic of industry success stories.

Sequoia's strategic early investment of $10 million, coupled with subsequent contributions, grants them a substantial 10% stake in Wiz, potentially yielding $3 billion from the acquisition. Index Ventures, the largest shareholder, may see over $3.8 billion from their 12% stake post-acquisition.

Wiz's board includes partners from these firms who built close relationships with CEO Assaf Rappaport and the founding team since their previous collective endeavor, acquired by Microsoft. The partnership was quick to support Wiz's inception in 2020.

Investors like Cyberstarts emphasize both personal and professional ties, illustrating a close bond that extends beyond business dealings. Cyberstarts Opportunity Fund, having invested in Wiz in 2024, is set to convert its $40 million investment into $128 million, consolidating gains along with Thrive Capital, securing a $1 billion stake from Wiz's recent funding rounds.