Could Alphabet’s Rumored $23B Acquisition of Cybersecurity Unicorn Wiz Spark a Revival in VC

Reports emerged last week that tech giant Alphabet, the parent company of Google, is in talks to acquire cybersecurity startup Wiz for a staggering $23 billion. If completed, this would represent one of the largest exits on record and have wide-ranging implications for venture-backed companies and investors.

According to sources familiar with the matter, deal discussions between Alphabet and 4-year old Wiz could extend into next week. An acquisition of this size would be unprecedented for such a young startup. However, experts believe it may help restart stalled merger and acquisition activity in the startup space.

Many entrepreneurs and VCs have grown anxious seeing few sizable startup exits materialize so far in 2024. But Angela Lee, a professor at a prominent business school, thinks a deal of this magnitude could provide the catalyst needed. “The market is ready for an exit at this scale,” she noted, expressing hope it will encourage more deals. However, she cautioned that few will match Alphabet’s resources to complete similar mega-acquisitions.

Signs also point to the deal having a positive ripple effect on venture capital fundraising. U.S. VC fundraising has lagged in 2024 compared to prior years, as limited partners grew wary over long holding periods in an uncertain landscape. Lee remarked the Wiz exit’s size and speed could ease some LP concerns by shortening expected timelines for venture returns.

Additionally, the deal’s potential to fuel dealmaking activity could give fundraising pitch decks a welcome boost. According to one data expert, early indicators show warming interest from investors and founders, though current market conditions remain challenging. A major exit like this could further stimulate private market transaction activity.

While regulatory and other hurdles may yet halt the proposed tie-up, experts agree such an acquisition, if realized, would inject much-needed optimism into the venture ecosystem. For startups and their backers waiting for markets to unfreeze, the rumored megadeal offers a glimmer of hope that momentum could again build for creating new unicorns.