Infographic showing Google's $32 billion Wiz acquisition with key stats: 222x return for Cyberstarts, $3.8 billion gain for Index Ventures, completed in 5 years - the largest venture capital software exit of 2025

The Wizards of Wiz: How Two VCs Turned Early Bets into Billion-Dollar Paydays

December 8, 2025 - By John Mecke

Google’s $32 Billion Bet Changes Everything

On March 18, 2025, Google announced a definitive agreement to acquire Wiz, the cloud security phenomenon, for $32 billion in cash. When the deal closes in early 2026, it will mark the largest acquisition in Google’s history, surpassing the $12.5 billion Motorola Mobility purchase by nearly three times. More importantly, it will cement Wiz’s place as arguably the most successful venture-backed software company exit of all time.

But while headlines focused on Sundar Pichai and CEO Assaf Rappaport, the real story may be found in the investors who saw Wiz’s potential when it was nothing more than four Israeli entrepreneurs with a bold vision. Two names stand above the rest: Shardul Shah of Index Ventures and Gili Raanan of Cyberstarts. Together, their firms are set to reap approximately $5.2 billion from the transaction—returns that will echo through venture capital history for decades.

Shardul Shah: The First Believer

Shardul Shah, a senior partner at the British-American firm Index Ventures, was the first institutional investor to back Wiz’s four founders. But his relationship with the team stretches back more than a decade. In 2014, Shah led Index’s investment in Adallom, the previous company founded by Assaf Rappaport, Ami Luttwak, Roy Reznik, and Yinon Costica. That bet paid off when Microsoft acquired Adallom for $320 million in 2015.

When Rappaport and his co-founders left Microsoft to start Wiz in January 2020, Shah didn’t hesitate. His conviction in the team’s capabilities had only deepened after watching them scale Microsoft’s Cloud Security Group from nothing to a $1.5 billion business during their five-year tenure. For early-stage SaaS founders, this illustrates a critical lesson about building investor relationships before you need capital.

“The art of venture capital investing is deeply personal,” Shah explained in a recent interview with Ynet. “Because I’d known the founders for 11 years, I believe I had a stronger sense of both my intuition and my analytical framework when it came to them.” His investment philosophy is anchored by three principles: it’s all about the founder, invest with extreme conviction, and operate with intentionality—go big or go home.

Today, Index Ventures holds the largest stake in Wiz—approximately 12% of the company. When the acquisition closes, that stake will translate into over $3.8 billion in proceeds. It represents one of the most spectacular returns in the firm’s nearly 30-year history, solidifying Shah’s reputation as one of the preeminent cybersecurity investors globally. He has been named to the Forbes Midas List multiple times, and his portfolio reads like a who’s who of successful cloud infrastructure companies: Datadog (public), Duo Security (acquired by Cisco), Nginx (acquired by F5), and Signal Sciences (acquired by Fastly).

Gili Raanan: The 222x Return

If Shah represents the power of longstanding founder relationships, Gili Raanan of Cyberstarts represents the power of domain expertise and concentrated conviction. A former general partner at Sequoia Capital where he led Israel investments for nearly nine years, Raanan founded Cyberstarts in 2018 with a singular focus: identify and accelerate the world’s best cybersecurity entrepreneurs.

Raanan’s credentials are formidable. He served in Unit 8200, Israel’s elite cyber intelligence division, winning both the Israel Defense Presidential Prize and the Innovation Award for his decade of service. He’s credited as one of the inventors of CAPTCHA, the ubiquitous security algorithm that protects websites worldwide. Before becoming an investor, he founded two successful startups—Sanctum (acquired by IBM) and nLayers (acquired by EMC).

When Wiz came together in early 2020, Raanan was among the first to recognize its potential. Cyberstarts co-led the $21 million seed round in February 2020, investing $6.4 million from its inaugural $54 million fund into a company valued at approximately $67 million post-money. The current AI funding environment makes such concentrated bets even more critical for early-stage investors.

The numbers that follow are staggering. According to TechCrunch, that $6.4 million investment is now worth approximately $1.3 billion based on Cyberstarts’ 4.1% stake at the time of the Google acquisition. Combined with $120 million in shares sold through secondary transactions over the years, Cyberstarts’ total return on its Wiz investment reaches $1.42 billion—a remarkable 222x return on the original investment.

That single investment transformed Cyberstarts’ first fund into one of the best-performing venture funds in history. The $54 million fund has achieved a 26x multiple on limited partner capital, with internal rates of return exceeding 100%—an unusual figure even for the world’s elite funds. In recognition of his achievements, Raanan was named #24 on the 2025 Forbes Midas List and ranked #3 on the Seed List.

The Power of Founder-Investor Relationships

The Wiz story illuminates a fundamental truth about venture capital that often gets lost in the noise of term sheets and valuations: the best investments come from deep, long-standing relationships between investors and founders. This dynamic is especially critical in today’s challenging SaaS exit environment.

Both Shah and Raanan knew the Wiz founders before Wiz existed. Both had backed them previously and watched them navigate the challenges of building and selling a company, then scaling within a corporate behemoth like Microsoft. When the founders came back to start something new, these investors didn’t need to rely on pitch decks or market analysis—they had years of firsthand evidence about who these people were and what they could accomplish.

The founding team—Rappaport, Luttwak, Reznik, and Costica—first met in 2001 as teenagers serving together in the Israeli army. They founded Adallom together in 2012, sold it together to Microsoft in 2015, stayed together at Microsoft for five years building the Azure security stack, and then left together to start Wiz in 2020. The four hold equal 10% stakes in the company, and major decisions are made collectively. As Fortune reported, this collaborative dynamic has been essential to Wiz’s success.

“I think part of the magic of the relationship is how different we all are,” Rappaport has said. “Each co-founder has a distinct personality. It allows us to bring out the best in each other.”

Lessons for SaaS Founders

For early-stage SaaS founders watching from the sidelines, the Wiz story offers several powerful lessons that align with proven exit strategies.

First, build relationships with investors before you need money. Shah and Raanan didn’t meet the Wiz founders at a pitch competition—they had a decade of shared history. When you’re ready to raise, you want investors who already believe in you, not investors you’re trying to convince from scratch. Understanding the M&A landscape is equally important for founders planning their trajectory.

Second, enterprise readiness matters from day one. Unlike most startups that begin small and scale up, Wiz deliberately built for Fortune 100 customers from the start. Their first design partners included Salesforce, Snowflake, Blackstone, and BMW. This unconventional approach required more upfront investment but created a differentiated product that scaled effortlessly as the company grew.

Third, know when to say no—and when to say yes. In mid-2024, Rappaport rejected Google’s initial $23 billion offer, believing Wiz could reach $100 billion as a public company. But by March 2025, with IPO markets uncertain and the offer increased to $32 billion, the calculation changed. Great founders know both how to build toward a vision and when to recognize an exceptional opportunity. For those weighing similar decisions, having a ‘Plan B’ exit strategy is essential.

The Concentration of Returns

The Wiz exit reinforces the power law that governs venture capital. A handful of investments generate the vast majority of returns, and the ability to identify and win allocation in those few companies separates the elite from the mediocre. This dynamic is especially pronounced in enterprise SaaS M&A.

Both Shah and Raanan concentrated their bets. When they believed in a company, they went all-in. Shah led multiple rounds in Wiz and served on the board. Raanan invested from his small first fund when conventional wisdom might have suggested spreading bets across more companies.

The venture capital industry recorded approximately $120 billion in global funding in Q3 2025 alone, according to KPMG’s Venture Pulse report. But the firms and individuals who will capture the lion’s share of returns from this era will be those who, like Shah and Raanan, had the conviction to bet big on outlier founders building category-defining companies. Understanding SaaS valuation dynamics is crucial for both founders and investors navigating this landscape.

As Wiz prepares to join Google Cloud, its investors are already looking toward the next Wiz. Both Cyberstarts and Index Ventures continue to deploy capital into early-stage cybersecurity and cloud infrastructure companies. If history is any guide, the patterns that created this extraordinary outcome—deep founder relationships, domain expertise, concentrated conviction—will create the next one too.

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John Mecke is the Managing Director of DevelopmentCorporate LLC, an M&A advisory and strategic consulting firm specializing in early-stage SaaS companies. With over 30 years of enterprise software experience, he helps pre-seed and seed-stage CEOs with competitive intelligence, strategic positioning, and exit planning. Learn more about our Strategic Acquisition Exit Advisory Services.