Greetings,

A few years ago, Snyk looked like the next big IPO. Its valuation soared past $8 billion, with sales doubling and tripling annually as the need for open-source security tools grew. But the company is now at a crossroads, with its growth slowing and IPO plans on hold.

This week, Valida Pau, Cory Weinberg, Katie Roof and Kevin McLaughlin reported that Snyk is now considering buyout offers, with one private equity firm's proposal coming in at less than half its last private valuation. This story shows how a new generation of startups is challenging the incumbents with more efficient tools, even as the bigger companies struggle to keep up.

Why it caught my eye:

• A significant slowdown in Snyk's growth, with revenue rising only 12% in the most recent quarter—a rate lower than its publicly traded competitors.
• The company has had to reject buyout offers well below its last private valuation of $7.4 billion.
• It highlights a shift in the cybersecurity landscape, as Snyk and other established players face pressure from newer startups and large rivals like Microsoft, which are incorporating similar security features into their own products.

This article is a must-read for anyone interested in how even highly valued software startups can falter when they can't adapt to a rapidly changing market.

Best,

Jessica Lessin
Founder & Editor-in-Chief

Cybersecurity Startup Snyk Considers Buyout Interest as IPO Plans Stall

Snyk, a startup that sells security tools for developers, seemed like a shoo-in for a lucrative initial public offering a few years ago. Sales were doubling or tripling every year, reaching into the hundreds of millions of dollars annually, as exploding corporate use of open-source software code created vulnerabilities that businesses needed to patch. Snyk's valuation soared to more than $8 billion.

Now, the decade-old company seems stuck. The tech IPO market is humming, but Snyk's potential offering has stalled. Its revenue growth slowed to 12% in the quarter that ended in June, according to a person with direct knowledge of the financial figures, lower than the growth rate at larger, publicly traded peers. The Boston-based company has been talking to potential private equity firms about a buyout, but Snyk rejected a proposal that was less than half its last private valuation, according to two people familiar with the discussions. The revenue figure and recent sales talks haven't been previously reported.

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