Wiz turns down $23 billion Google deal, says it’s aiming for IPO

Wiz, the $12 billion cloud security startup that was in acquisition talks with Google parent Alphabet, has decided not to move forward with the deal and will remain an independent company, according to an internal note sent to company’s 1,200 employees on Monday viewed by Fortune.

“While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz,” CEO Assaf Rappaport wrote in the note. Rappaport added in the email that the company’s next target is to reach $1 billion in annual recurring revenue and to take the company public.

A source familiar with the matter told Fortune that Wiz’s investors were fully supportive of the decision. From Rappaport and Wiz’s end, the decision to walk away from a possible deal with the tech giant came down to a simple calculation: Wiz is already big enough on its own to gun for an IPO, which is the ultimate goal for the company, the source said.

Expected regulatory scrutiny of the deal, which would have represented the largest acquisition in Google’s history, may also have contributed to Wiz’s decision to go at it alone.

“The market validation we have experienced following this news only reinforces our goal – creating a platform that both security and development teams love,” Rappaport wrote in the note to employees Monday. “We are grateful for the faith our employees, investors, and customers have in us as we build the best cybersecurity company in the world.”

Speaking at the Fortune Brainstorm Tech conference last week, Rappaport said that the cybersecurity industry was ripe for consolidation. Still, he noted that IPOs and acquisitions are merely “milestones” in a longer journey.

“That’s kind of the mindset that we always have, being private, being public, and a startup.”

Rappaport’s interview at Brainstorm Tech is the only place he has spoken publicly since news of a possible deal broke.

The four-year-old startup, with offices in New York and Tel Aviv, Israel, raised a whopping $1 billion in venture funding earlier this year at a $12 billion valuation. The company had indicated at the time that it planned to use the capital to continue growing and to go on the hunt for acquisitions.

In December, Wiz did its first-ever acquisition, of developer-focused cloud platform Rafft, and in April the company acquired Gem Security, which Fortune exclusively reported. A source familiar with the deal told Fortune at the time that Gem’s price tag came in at $350 million. It’s likely Wiz will be back on the acquisition trail for the rest of the year.

Wiz’s investors include Andreessen Horowitz, Lightspeed Venture Partners, Thrive Capital, Index Ventures, Cyberstarts, Advent International, Greylock, Greenoaks, Salesforce Ventures, Sequoia Capital, and Wellington Management.

Google did not yet responded to Fortune’s request for comment.