By Hamza Faisal
Datadog wants into the cloud-security big leagues badly enough to reportedly offer nearly $4 billion for a four-year-old startup — and Upwind may not need the money anyway. The Information reported on Thursday that the cloud monitoring giant approached Upwind about an acquisition at a price close to $4 billion, but the startup has not accepted the bid. Instead, Upwind is closing a $300 million funding round that values the company at roughly $3.8 billion.
The offer on the table
According to The Information, Datadog made its approach recently and Upwind turned it down, opting to stay independent. A representative for Upwind declined to comment, and Datadog did not immediately respond to the report. Datadog's shares fell 5.1% on the news, with investors apparently unconvinced about the timing and the price.
The math behind the rejection is hard to argue with. With a $300 million private round already setting Upwind's value at $3.8 billion, Datadog's bid barely clears that number. An acquisition offer needs to pay enough of a premium to make founders prefer an exit to another year of running the company themselves. On these figures, it simply did not.
Why Upwind costs this much
Founded in 2022 by Amiram Shachar, Upwind develops cloud security software that monitors applications and infrastructure running in the cloud, identifies risks, and responds to attacks automatically. Its customer list includes Roku and Brazilian digital bank Nubank, and its platform is built to watch over emerging AI agent traffic alongside human and service workloads — exactly the problem enterprise buyers are scrambling to solve right now.
The valuation has moved fast. In January 2026, Upwind raised $250 million at a $1.5 billion valuation. Less than a year later, the $3.8 billion number more than doubles it, reflecting intense investor appetite for security software that can guard against AI-driven threats. Globes reported that Upwind received the Datadog offer but chose the fundraising round instead.
The deal math — and the dispute
There is, however, a disagreement about what actually happened. CTech reported that while The Information described a nearly $4 billion offer, its own reporting found the reported offer was not made. Datadog and Upwind are not new to each other: an earlier round of talks at a smaller price was reported months ago and did not close.
Whatever the true sequence of events, the episode lands in the middle of a heated stretch for cloud-security consolidation. The Information reported in August that Palo Alto Networks' CEO had explored acquiring Datadog itself. Datadog, the dominant observability vendor, has been pushing further into security, and the line between monitoring infrastructure and securing it keeps getting thinner. Datadog is set to report third-quarter results on November 4, when investors will get a fresh look at how far the security push goes.
By Hamza Faisal
