* The IRR  assumes a Q1 2026 realization. Also note that of course, Index also made some later round investments in Wiz, with lower risks and returns. Those are not included in the numbers mentioned.

Let’s start 8 years before Wiz was even created: In 2012, a McKinsey Tel-Aviv consultant called Assaf Rappaport founded a company called Adallom to help enterprises protect their data in cloud environments. Adallom attracted venture funding from Gili Ranaan, then a partner at Sequoia, and Shardul Shah, a young principal at Index Ventures. Within 3 years, Microsoft bought the company for $320M. Although Adallom never became a household name, it is still considered a successful venture investment, and a great acquisition for Microsoft. Adallom became a cornerstone of Microsoft’s cloud security business, now estimated to generate some $20B in revenues.

More importantly for our story though, Adallom helped forge a bond of trust between Gili, Assaf and Shardul; such that, 8 years later, when Assaf left Microsoft to found Wiz, he wouldn’t have to think twice before approaching his previous backers to help fund his new gig: Gili who had since founded his own venture fund called Cyberstarts, Shardul who had been promoted to partner at Index, and Doug Leone, the managing partner of Sequoia (who had worked together with Gili on the Adallom investment team).

Many people imagine that the job of a venture capitalists is to wait for promising startups to parade in front of them, as they decide yay or nay; then cut cheques and sit back and wait for the start-up to get acquired for billions. The reality is that success in the venture capital world is often built on a history of well-earned battle scars, or to quote Teddy Roosevelt, by “the man[!] who is actually in the arena, whose face is marred by dust and sweat and blood;” In venture, that sweat and blood often comes from the previous deals that the VC has worked on – the experience gained from previous successes, as well as failed investments, and the networks built as a result. Oftentimes, the greatest venture successes are founded by ex-employees of companies that had been previously backed by the same VC. This is a win-win for all. The VC knows how this new founder operates from their previous ventures and has gotten to know and trust them as a person, understanding their values, their integrity, their capabilities, as well as their grit & commitment to deliver on their promises. Even if they had not previously worked together directly, the new founder might have been referenced by their boss or boss’s boss to the VC, transferring that bond of trust through this network. Similarly, the founder will have also taken away key lessons from the previous startup and seen how success can be built, how new markets can be created, how growth can be managed, how a successful company culture can be built. The VC too would have greater confidence that the new founder knows what (s)he is getting into. The two share a common frame of reference, helping the VC gain Conviction on the opportunity and the entrepreneur’s ability to execute on it.

In the venture world Conviction is key. Locking in the financing helps of course, but in practice - for the best entrepreneurs – money has increasingly become a commodity. The best entrepreneurs often have access to multiple sources of capital, and they get to choose which VC to partner with. For this, the VC’s Conviction in the opportunity becomes critical. This Conviction creates impetus for the VCs to help the startup as much as possible, leveraging their rolodex to call on executives at companies that might become customers of the startup, or convince these same execs to join the company. The Conviction will also convince the other partners at the firm to do the same - working together and doing their utmost to make the start-up a success, prioritizing it over others in the portfolio.