Databricks Poised for $1 Billion Investment from Thrive Capital, Valuation Set to Soar to $55 Billion

Thrive Capital Reportedly Weighing $1 Billion Databricks Stake | PYMNTS.com

Thrive Capital is reportedly in discussions to invest $1 billion in analytics software maker Databricks. This deal would value the company around $55 billion, Bloomberg News reported Thursday (Nov. 14), citing sources familiar with the matter. Those sources say Thrive is expected to lead a share sale, allowing some early investors and employees to sell stakes to new investors. PYMNTS has contacted both companies for comment but has not yet gotten a reply. Databricks was valued at $38 billion in a funding round in 2021 and $43 billion last year. As Bloomberg notes, the deal, if it goes forward, would mark the latest in a series of big investments by Thrive into big Silicon Valley startups such as OpenAI. Thrive raised $5 billion earlier this year for its largest ever venture capital funds, according to a Wall Street Journal report. "The technological breakthroughs that will occur over the next years will be unlike anything we have ever experienced before," Thrive founder Joshua Kushner wrote in a letter to investors. PYMNTS spoke earlier this year with Databricks Global Head of Financial Services Junta Nakai about the company's efforts to educate its clients, who include half of the Fortune 500. "Especially in financial services, they want to use the most important asset that they have today more effectively, and that asset is data," Nakai said. "And then to do so, you need to go up this maturity curve. The maturity curve breaks down to something simple, which is you must modernize your tech stack. "You need to democratize access to data right throughout your company, and then you must transform your company," he said. "That's what we do with our technology. And simply put, it stores all your data in a single place, and do all the things that you do with your data come from that." Founded in 2013, Databricks gives companies the ability to create their own generative AI models, which can be rolled out and monitored at scale. A good example of how this works can be seen in Databricks' work with Block, PYMNTS wrote. That company employs machine learning to detect and defend against fraud and enhances the user experience with personalized recommendations, which requires a strong grasp of customer needs and preferences.

Databricks Looks to Raise $1 Bn from Thrive to Outsmart the Competition

Thrive Capital is in talks to invest $1 billion in Databricks, which would boost the data analytics company's valuation to around $55 billion, reflecting growing interest in AI-driven data solutions following its $43 billion valuation last year. With this fund, Databricks looks to accelerate advancements in AI-driven data solutions, expand its enterprise capabilities, and solidify its position as a leader in scalable analytics technology amid soaring demand. The deal would add Databricks to Thrive's notable portfolio, including GitHub, Instagram, Stripe, Slack, and OpenAI among others. This investment, expected to be Thrive's largest to date, underscores confidence in Databricks' technology as the demand for AI platforms grows. Many experts believe that Databricks is poised to become a dominant force, offering businesses a robust ecosystem for their AI and data needs. These developments mark the company as one of the most highly anticipated IPOs in the tech industry, setting the stage for further advancements in enterprise data solutions. Databricks' recent partnership with Amazon Web Services (AWS) enables them to integrate deeply with AWS services, providing scalable, cloud-based solutions for enterprises. This collaboration allows Databricks to optimise its data lakehouse platform for AWS's extensive customer base, offering flexible data analytics tools that meet the growing needs of AI-driven businesses. This investment and acquisition trajectory highlights Databricks' strategic goal to dominate the enterprise AI market. Earlier this year Databricks partnered with emerging startups like Ragas, a Bengaluru-based Y Combinator-backed company, to provide it with valuable resources for high frequency evaluations essential to big data and AI performance. Ragas' support for AWS, Microsoft, and Databricks indicates a trend of collaborative growth between industry giants and specialized AI providers. Databricks' CTO, Matei Zaharia, emphasised at the Data+AI Summit 2024 that the company's vision is to support enterprises in building high quality, domain specific AI applications using its evolving suite of tools, such as the Mosaic AI offerings. This drive is aligned with the company's broader ambition to cater to large scale systems, including the trend towards compound AI models that combine various models, external data, and API calls. These multifaceted moves signal Databricks' readiness for its IPO while reinforcing its commitment to pushing the boundaries of AI in enterprise solutions. Databricks vs the world This new development also comes in light of the escaping rivalry between Snowflake and Databricks. Josue A Bogran, a Databricks product advisory board member, defended Databricks, saying, "Databricks offers 'serverless' compute... supporting both SQL and Python," positioning it as a flexible Platform-as-a-Service (PaaS) approach that allows organisations more control compared to Snowflake's SaaS model.