Introduction to Wiz’s Acquisition

The recent $32 billion all-cash acquisition of Wiz by Alphabet, the parent company of Google, is expected to yield a massive payday for the cybersecurity startup’s early-stage investors.

Impact on Early Investors

This deal represents a significant win for Sequoia, one of the most renowned venture capital firms, which is anticipated to generate $3 billion, roughly 25 times the amount it initially invested in the company, as reported by Bloomberg. Although Sequoia’s limited partners will see substantial returns, their percentage gains will be significantly lower than those of another early Wiz backer, Israel-based VC firm Cyberstarts.

Cyberstarts’ Investment in Wiz

Cyberstarts, a cybersecurity-focused venture capital firm, invested $6.4 million from its first $54 million fund in Wiz’s seed round in February 2020.

Returns on Investment

Today, that fund owns 4.1% of Wiz, positioning it to make a substantial $1.3 billion from the deal, according to a person familiar with the firm’s performance. Additionally, Cyberstarts previously sold $120 million in Wiz shares through secondary transactions, bringing the fund’s total return to $1.42 billion — a remarkable 222x return on the original investment.

Later-Stage Investments

Cyberstarts also participated in Wiz’s later-stage rounds, investing a total of $40 million from its opportunity fund. These investments are now valued at $128 million, representing a more modest 3.2x return on invested capital, as told to TechCrunch by a person familiar with Cyberstarts’ performance.

Industry Reaction

“Cyberstarts is going to have one of the best-returning funds in VC history,” Shai Goldman, a partner at Next Wave NYC, wrote on X. “This investment was done out of their inaugural fund, a good reminder that Fund 1 can be amazing one to back as a LP.”

Background on Cyberstarts

Cyberstarts wasn’t an ordinary emerging VC manager when it closed its inaugural fund in 2018. The firm was founded by Gili Raanan, who previously spent nearly nine years as a Sequoia general partner leading its Israel investment strategy.

Performance of Cyberstarts’ Inaugural Fund

The small $54 million fund has already achieved a 26x multiple on its limited partner capital. And that’s not even counting other potential exits, such as Island, a startup reportedly raising capital at a valuation of $4.5 billion.

Other Investors’ Returns

Index Ventures, which owns a 12% stake in Wiz, is poised to make over $3.8 billion once the sale is complete, as reported by Reuters.