Databricks Raises $10 Billion in Massive Funding Round, Delaying IPO Plans

When Ali Ghodsi Almost Fell Off the Chair

"Suddenly, we saw $19 Bn of interest," recalls Databricks CEO, saying unlike anything witnessed before. Databricks chief Ali Ghodsi, in a recent interview with Axios, candidly credited media leaks for creating a frenzy among investors. "The press leaks it, and then your phone explodes with investors," he added, saying "Suddenly, we saw $19 billion of interest, and I almost fell off the chair." This development comes in the backdrop of Databricks -- the AI and data analytics company -- raising $10 billion in its latest funding round far surpassing the $3-4 billion it initially set out to raise. "We started small, looking to raise around $3-4 billion, but once the press leaked the news, suddenly all the investors came in," said Ghodsi. He added that his phone exploded with investors reaching out to him, many of whom he hadn't spoken to in years. "Investors were like, 'Ali, it was seven years ago I talked to you, but I love you. Let's talk,'" quipped Ghodsi. A month ago, AIM reported that Databricks was planning to raise $1 billion from Thrive Capital. Around the same time, The Information published a report stating that Databricks was looking to raise $7 billion to $9 billion, with a valuation expected to exceed the previously reported $55 billion, reaching approximately $61 billion. The company said that it plans to use its latest funding for AI development, acquisitions, global expansion, and employee liquidity. In 2024 alone, the company has made four acquisitions, including the $1 billion acquisition of Tabular in June. In October, Databricks signed a five-year deal with Amazon to use Trainium chips for building AI models with MosaicML. Databricks acquired MosaicML in July last year and later used its technology to launch the Databricks Data Intelligence Platform. Databricks' Data Intelligence Platform includes AI solutions to support the entire ML lifecycle. Its core offering, Mosaic AI, simplifies building, deploying, and managing AI and ML models. The platform supports generative AI with large language models (LLMs) using techniques like prompt engineering, RAG, fine-tuning, and pretraining. In March 2024, Databricks launched DBRX, a transformer-based model with 132 billion parameters and 36 billion active during inference. Its MoE architecture outperforms open-source models and rivals closed-source models like GPT-3.5 and Gemini 1.5 Pro. This funding comes in light of the escaping rivalry between Snowflake and Databricks. Recently, Snowflake CEO Sridhar Ramaswamy shared his thoughts on the total cost of ownership (TCO) comparison between Snowflake and what he referred to as "Spark-based SaaS" solutions - a jibe at Databricks. "Snowflake consistently outperforms Spark-based SaaS with a 30% price-performance improvement... helping teams focus on innovation, not complexity," Ramaswamy remarked, fueling a heated debate, particularly as Databricks supporters argue that the additional management controls in Spark are essential for customisation. Interestingly, Databricks subtly acknowledged a shift in strategy, hinting at an aggressive corporate approach. "We had a program called Snow Melt to go after Snowflake -- but that's behind us now," said Ghodsi. Databricks has recently enhanced its SQL and business intelligence capabilities, venturing into Snowflake's traditional domain. On the other hand, Snowflake has launched products to compete with Databricks in areas like data engineering and machine learning. The company also has an initiative called 'SparkAttack' to capture machine learning workflows from Databricks. Interestingly, Snowflake's annual revenue run rate is $3.77 billion, higher than Databricks' $3 billion. However, in the recent Cerebras Valley event, Ghodsi said that there was a time when Snowflakes used to keep him up at night, but not anymore. Ghodsi also mentioned that it was quite competitive when they were on their way to acquire Tabular. "Multiple vendors were very interested - I mean, you're good at guessing who was really interested in that," subtly indicating the involvement of their biggest rival. Ghodsi said that the company has purposely delayed the plans of going public, partly due to economic uncertainties like inflation and the election year. "Six months ago, we decided it would be 'dumb' to IPO this year. We wanted to wait for stability, especially given the pressure from interest rates and inflation," he said. Despite the delay in an IPO, the rapid success of this funding round signals Databricks' continued growth. Ghodsi added that the company's primary goal was to provide liquidity to employees who might otherwise have to wait years for an IPO. "The earliest theoretical possibility of an IPO would be next year, and there's a lockup period, so it would have been too long for employees to wait," he said.

Databricks valued at $62B after massive $10B funding round

Databricks has raised $10 billion in its latest funding round, raising its valuation to $62 billion. This significant investment comes from major venture capital firms such as Thrive Capital, Andreessen Horowitz, Insight Partners, and Iconiq Growth. The funding aims to bolster Databricks' capacity to compete for top AI talent and finance stock options for employees. The Series J funding round was noted as substantially oversubscribed, with Databricks having already raised $8.6 billion towards its $10 billion target. Ali Ghodsi, the CEO of Databricks, emphasized the competitive landscape for AI talent, remarking, "The talent war for AI is like no other time before." This funding will help alleviate pressure on employees who face substantial tax liabilities as a result of stock unit vesting. Vince Hankes of Thrive Capital highlighted that a significant portion of the funds will enable employees to cash out their options and manage related taxes, comparing the deal to Stripe's previous large funding round. As a member of Silicon Valley's elite, Thrive Capital invested "at least" $1 billion and plans to support Databricks in building what they envision as the next $1 trillion infrastructure company. The remaining funds will be allocated for the development of new AI products, acquisitions, and expansion into international markets. Databricks has experienced remarkable growth recently, anticipating annualized revenue to hit $3 billion by the end of next month. This figure reflects a year-over-year revenue increase of over 60% in the most recent quarter. The company's revenue growth has contributed to a 44% hike in its valuation, up from $43 billion in September 2023. Ghodsi noted that the company is not in a hurry to go public, stating that "the absolute earliest we would go public is next year, but we have flexibility now." The funding attracted participation from other prominent investors, including Singapore's GIC and early investors in Twitter and Facebook, such as Yuri Milner's DST Global. New participants like MGX, a UAE fund focused on AI, further solidified the investment's global appeal. The deepening investment landscape places Databricks amidst a growing cohort of AI and tech companies vying for significant market share and talent. For context, Databricks has successfully positioned itself as a significant player among giants such as OpenAI and SpaceX, currently trailing only behind a few US firms in valuation. Its revenue trajectory also positions it favorably against its largest competitor, Snowflake, which has a market capitalization of $57 billion.

Databricks raising mammoth $10B funding round at $62B valuation - SiliconANGLE

Cloud data platform provider Databricks Inc. today announced that it's raising a $10 billion Series J funding round at a $62 billion valuation. The investment doesn't come as a surprise. Rumors that Databricks is in the process of raising capital first emerged last month, when sources told CNBC that the company was seeking at least $5 billion. Last week, Reuters reported that that the sum could exceed $9.5 billion thanks to higher-than-expected investor interest. Thrive Capital, which recently backed a multibillion-dollar funding round for OpenAI, is co-leading Databricks' raise with Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management. The Ontario Teachers' Pension Plan, ICONIQ Growth, MGX, Sands Capital and Wellington Management are participating as well. The deal ranks as one of the largest startup funding rounds on record. Enterprises use Databricks' platform to store and analyze large volumes of data, as well as build artificial intelligence models. At its core, the software is based on a so-called data lakehouse. This is a type of data management system that combines features from two earlier product categories: data lakes and data warehouses. Data lakes are optimized to store unstructured and semi-structured information in a cost-efficient manner. A data warehouse, in turn, is a system geared towards storing structured records. Such platforms also support ACID, a reliability standard that helps ensure information isn't lost in the event of an outage. Databricks disclosed today that its annualized revenue run-rate is set to top $3 billion at the end of its current quarter. The company's top line growth is driven partly by Databricks SQL, the subset of its feature set geared towards creating data warehouse environments. Databricks says that the offering's revenue run-rate is up more than 150% from a year ago to $600 million. Databricks SQL is one of several products the company has built atop its core data lakehouse over the past few years. AI is another major focus of the software maker's product roadmap. Databricks' engineering efforts in this market draw on technology and talent from Mosaic AI Inc., a machine learning startup it bought last year for $1.3 billion. The company has used the acquisition to launch an AI research unit. In March, the unit released DBRX, an open-source large language model based on a mixture-of-experts architecture. When it receives a query, the model activates only some of its components to generate an answer rather than all of them as is the usual practice, which reduces hardware usage. Databricks has also integrated technology from Mosaic into its core platform. In June, the company introduced two AI tools for comparing the performance of LLMs and building RAG applications. More recently, it added an application programming interface for generating synthetic training datasets. "More and more, the center of gravity is going to shift towards the data and AI you have built rather than the app you're building around it. The app becomes less important," Databricks co-founder and Chief Executive Officer Ali Ghodsi said in a recent interview on SiliconANGLE Media's theCUBE. "The particular UI, how things look like won't matter that much. Even the shape of the data doesn't matter so much because the gen AI is able to understand it." Databricks said today that part of the proceeds from its new funding round will go towards building more AI products. Additionally, the company plans to make acquisitions and significantly grow its international go-to-market operations. Another portion of the capital will be used to provide liquidity for current and former employees. With another $10 billion on its books, Databricks could take more time to enhance its balance sheet before going public. The company disclosed today that it expects to achieve a positive free cash flow for the first time this quarter. Last month, Ghodsi stated that Databricks plans to go public in the second half of 2025 at the earliest.

'It's dumb to IPO this year': Databricks CEO explains why he's waiting to go public

Databricks just closed one of the largest funding rounds ever, raising a staggering $10 billion in fresh capital. Naturally, technology investors were quick to ask what this means for the company's highly anticipated IPO. During an event in San Francisco on Tuesday night, Databricks CEO Ali Ghodsi explained why he's waiting until at least 2025 to go public. "This year was an election year. We wanted to get some stability - people are worried about interest rates, inflation... So we said look, it's dumb to IPO this year, so we're definitely going to wait," said Ghodsi during an interview with Dan Primack during the Axios AI Summit. "The earliest theoretical possibility of an IPO would be next year, and then there's lock-up periods, so it would just be too long of a period for employees to get liquidity." Databricks is using this "Series J" to let early employees cash out and continue growing. While 2024 was uncertain in many ways, the IPOs of ServiceTitan, Reddit, and other companies have largely been successful. But why risk it when you can raise as much money as Databricks? Ghodsi said this latest round could have been nearly double the amount it just closed. We knew investors were clamoring to get in, but the craze caused Databricks to raise its share price. The data analytics company started out trying to raise $3 billion to $4 billion in this round, according to Ghodsi, but he says that press reports about their fundraising efforts drove interest through roof. "I saw this Excel sheet where they keep a tally of all the people that want to invest. It was $19 billion of interest, and I almost fell off the chair," said Ghodsi. "And we hadn't even talked to everybody. I was like, 'Oh my God, that's a huge amount of numbers.' So then we actually moved the price up." Even after the impressive fundraise, Ghodsi isn't ruling out a Databricks IPO in 2025. However, he said it could be 2026 as well. He said it's far less important to go public than it was 10 to 15 years ago, as this record-breaking round indicates, but it's still something the company wants to do. That said, Ghodsi isn't trying to squeeze in an IPO before the "AI bubble," as he called it, bursts. "I mean, it's peak AI bubble. It doesn't take a genius to know that a company with five people which has no product, no innovation, no IP - just recent grads - [is not] worth hundreds of millions, sometimes billions," said Ghodsi. "You get billion-dollar valuations on these startups that have nothing - that's a bubble." The Databricks CEO didn't clarify what startups he was talking about, but we've certainly seen a lot of AI unicorns this year. None of this seems to worry Ghodsi, however, who says his company and its valuation can stand the test of time. He thinks his company has already won out its first major battle with another data analytics startup, Snowflake. "We had a program called 'SnowMelt,'" said Ghodsi, confirming reports of an initiative within Databricks to steal business from Snowflake. "We were going after Snowflake and we demonized them, but that's behind us." That effort to demonize Snowflake came at a hefty price, reportedly causing Databricks to pay $2 billion to acquire a tiny startup called Tabular. Snowflake also reportedly wanted to buy Tabular, even though the company was only doing $1 million in annual recurring revenue at the time. Now, Databricks is chasing bigger competitors with products that rival enterprise giants like Salesforce and Microsoft. Ghodsi says data and AI will continue to play a slightly more important role in people's lives every year, and he thinks his company is well-positioned to fill that niche.

Databricks is Raising $10B Series J Investment at $62B Valuation

Funding led by new investor Thrive Capital Company expects to cross $3B in revenue run rate and achieve positive free cash flow in fourth quarter Databricks, the Data and AI company, today announced its Series J funding. The company is raising $10 billion of expected non-dilutive financing and has completed $8.6 billion to date. This funding values Databricks at $62 billion and is led by Thrive Capital. Along with Thrive, the round is co-led by Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management. Other significant participants include existing investor Ontario Teachers' Pension Plan and new investors ICONIQ Growth, MGX, Sands Capital and Wellington Management. The company has seen increased momentum and accelerated growth (over 60% year-over-year) in recent quarters largely due to the unprecedented interest in artificial intelligence. To satisfy customer demand, Databricks intends to invest this capital towards new AI products, acquisitions, and significant expansion of its international go-to-market operations. In addition to fueling its growth, this capital is expected to be used towards providing liquidity for current and former employees, as well as pay related taxes. Finally, this quarter marks the first time the company is expected to achieve positive free cash flow. "We were substantially oversubscribed with this round and are super excited to bring on some of the world's most well-known investors who have a deep conviction in our vision. These are still the early days of AI. We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers and our team is committed to helping companies across every industry build data intelligence," said Ali Ghodsi, Co-Founder and CEO of Databricks. "We're building transformative data and AI infrastructure and excited to move aggressively in service of our customers and their success." The Databricks Data Intelligence Platform democratizes access to data and AI, making it easier for organizations to harness the power of their data for analytics, machine learning, and AI applications. Built on an open source foundation, the platform enables organizations to drive innovation to increase revenue, lower costs, and reduce risk. Customers use the Data Intelligence Platform to find and treat diseases and cancer earlier, identify new ways to combat climate change, detect financial fraud, develop pharmaceuticals faster, reduce time to mental health intervention, decrease local financial inequality and much more. "Databricks, driven by its mission to democratize data and AI, has emerged as the platform of choice," said Joshua Kushner, CEO of Thrive Capital. "We have witnessed the team's unrelenting execution, and consider it an honor to be partners with the company for the long term." Today's announcement comes on the heels of Databricks' recent momentum which includes: Growing over 60% year-over-year in the third quarter ended October 31, 2024Expecting to cross $3 billion revenue run-rate and be free cash flow positive in the fourth quarter ending January 31, 2025Continuing to achieve non-GAAP subscription gross margins above 80%Having 500+ customers consuming at over $1 million annual revenue run-rateAchieving $600 million revenue run rate for Databricks SQL, the company's intelligent data warehousing product, up more than 150% year-over-year Databricks' momentum builds upon a year of global business expansion. To continue to serve its customers around the world, Databricks announced its new European regional hub in London and Asia Pacific and Japan (APJ) regional hub in Singapore, as well as an expanded presence in Latin America and the Middle East. About Databricks Databricks is the Data and AI company. More than 10,000 organizations worldwide -- including Block, Comcast, Condé Nast, Rivian, Shell and over 60% of the Fortune 500 -- rely on the Databricks Data Intelligence Platform to take control of their data and put it to work with AI. Databricks is headquartered in San Francisco, with offices around the globe and was founded by the original creators of Lakehouse, Apache Spark™, Delta Lake and MLflow. To learn more, follow Databricks on X , LinkedIn and Facebook.

Databricks is raising $10B Series J investment at $62B valuation

This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. The company is raising $10 billion of expected non-dilutive financing and has completed $8.6 billion to date. This funding values Databricks at $62 billion and is led by Thrive Capital. Along with Thrive, the round is co-led by Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management. Other significant participants include existing investor Ontario Teachers' Pension Plan and new investors ICONIQ Growth, MGX, Sands Capital and Wellington Management. The company has seen increased momentum and accelerated growth (over 60% year-over-year) in recent quarters largely due to the unprecedented interest in artificial intelligence. To satisfy customer demand, Databricks intends to invest this capital towards new AI products, acquisitions, and significant expansion of its international go-to-market operations. In addition to fueling its growth, this capital is expected to be used towards providing liquidity for current and former employees, as well as pay related taxes. Finally, this quarter marks the first time the company is expected to achieve positive free cash flow. "We were substantially oversubscribed with this round and are super excited to bring on some of the world's most well-known investors who have a deep conviction in our vision. These are still the early days of AI. We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers and our team is committed to helping companies across every industry build data intelligence," said Ali Ghodsi, Co-Founder and CEO of Databricks. "We're building transformative data and AI infrastructure and excited to move aggressively in service of our customers and their success." The Databricks Data Intelligence Platform democratizes access to data and AI, making it easier for organizations to harness the power of their data for analytics, machine learning, and AI applications. Built on an open source foundation, the platform enables organizations to drive innovation to increase revenue, lower costs, and reduce risk. Customers use the Data Intelligence Platform to find and treat diseases and cancer earlier, identify new ways to combat climate change, detect financial fraud, develop pharmaceuticals faster, reduce time to mental health intervention, decrease local financial inequality and much more. "Databricks, driven by its mission to democratize data and AI, has emerged as the platform of choice," said Joshua Kushner, CEO of Thrive Capital. "We have witnessed the team's unrelenting execution, and consider it an honor to be partners with the company for the long term." Today's announcement comes on the heels of Databricks' recent momentum which includes: Growing over 60% year-over-year in the third quarter ended October 31, 2024 Expecting to cross $3 billion revenue run-rate and be free cash flow positive in the fourth quarter ending January 31, 2025 Continuing to achieve non-GAAP subscription gross margins above 80% Having 500+ customers consuming at over $1 million annual revenue run-rate Achieving $600 million revenue run rate for Databricks SQL, the company's intelligent data warehousing product, up more than 150% year-over-year Databricks' momentum builds upon a year of global business expansion. To continue to serve its customers around the world, Databricks announced its new European regional hub in London and Asia Pacific and Japan (APJ) regional hub in Singapore, as well as an expanded presence in Latin America and the Middle East.

Databricks raises $10B as it barrels toward an IPO | TechCrunch

Databricks, the data analytics platform, has raised $10 billion in a funding round that values the company at $62 billion (up from $43 billion). Backers include Thrive Capital, Andreessen Horowitz, DST Global, GIC, and Iconiq Growth. The round is one of the largest venture rounds in history, and will drive future future mergers and acquisitions, stock payouts to employees, and expansion abroad, according to a statement obtained by CNBC. Databricks' mammoth "Series J" comes ahead of the company's hotly anticipated IPO. Founded in 2013 by seven Ph.D. candidates from UC Berkeley, Databricks sells AI, big data analytics, and cloud tooling to enable companies to build data- and AI-powered applications. Databricks expects to generate positive free cash flow for the first time with a $3 billion revenue run rate in the quarter that ends on January 31, according to CNBC. The company's revenue in the October quarter grew more than 60% year over year.

Databricks in midst of securing $10bn in funding

The venture round is one of the largest rounds in history. Data and AI software company Databricks is raising $10bn, with $8.6bn completed to date. As a result of the Series J funding, which is one of the largest funding rounds in history, Databricks is now valued at $62bn, up from $43bn. The funding will be used to help drive future acquisitions, develop new AI products and international expansion as well as providing liquidity for current and former employees. The round was led by New-York based venture capital firm Thrive Capital, alongside Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management. Other participants in the round included existing investor Ontario Teachers' Pension Plan and new investors ICONIQ Growth, MGX, Sands Capital and Wellington Management. In addition, Databricks claimed that it is projected to cross $3bn in revenue run rate and achieve positive free cash flow in its fourth quarter. Founded more than 10 years ago, Databricks provides a data intelligence platform designed to make it easier for organisations to use data machine learning, analytics, and AI applications. At the beginning of this year, SiliconRepublic.com named it one of the tech start-ups to watch in 2024. Ali Ghodsi, the company's CEO and co-founder, welcomed the announcement and added that the business was "substantially oversubscribed with the funding round". He also praised the investors for having "a deep conviction" in the company's goals. Joshua Kushner, CEO of Thrive Capital, said: "Databricks, driven by its mission to democratise data and AI, has emerged as the platform of choice. We have witnessed the team's unrelenting execution and consider it an honour to be partners with the company for the long term." The announcement has sparked questions about the San Francisco-based company's hotly anticipated initial public offering (IPO). However, at an event in San Francisco last night (17 December), Ghodsi said he's waiting until at least 2025 to go public. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Databricks reportedly closing on $9.5B mega funding round - SiliconANGLE

Big data software specialist Databricks Inc. is reportedly closing on what Reuters describes as "one of the largest venture capital funding rounds in history". The company is said to be engaged in talks with investors over a twice oversubscribed funding round that could add more than $9.5 billion to its balance sheet. The amount far exceeds its original funding goal and could even rise further, the report added, as investors clamour to own a piece of the fast-growing data analytics firm. Databricks, which provides tools that help enterprises process and analyze large data volumes, will likely be valued at more than $60 billion once the round closes, three unnamed sources told Reuters. Reportedly, investors see that price as a bargain, as the company is projected to generate revenue of over $3.8 billion in the next fiscal year. The mega funding round is expected to be led by new investor Thrive Capital, and see the returning participation of existing backers like Andreessen Horowitz, Insight Partners and GIC, the Singaporean sovereign wealth fund. In addition to the direct funding, Databricks is also said to be discussing a $4.5 billion debt financing raise, which includes a $2.5 billion loan. Bloomberg first reported on those talks Founded in 2013, Databricks began life as a data analytics company and has since expanded into the artificial intelligence industry, building a cloud-based platform for governing information that's used to power AI applications. It was most recently valued at $43 billion in September. The AI boom has been a big boon for Databricks, as its tools are increasingly being used to help enterprises create and deploy AI applications that require massive volumes of data. Its customers are using the Databricks platform to store growing amounts of information used to train their AI models. If Databricks completes the funding round, it would come as a big bonanza to its early employees, as the funds raised will be used to buy back expiring restricted stock units and also cover the related tax costs of those purchases. The company will then issue preferred shares to its new investors, Reuters reported. The funding round was reportedly designed to address the employee's expiring options, as the company's management sees it as preferable to adding to its balance sheet. It mirrors a similar move by the payment company Stripe Inc., which last year raised $6.5 billion to buy back employees' stock. The company is regarded as the primary rival to the publicly-traded data warehouse firm Snowflake Inc., which currently has a market capitalization of around $56 billion. The talks illustrate the seemingly endless enthusiasm venture capitalists have to throw their money at AI companies. In October, OpenAI closed on a $6.5 billion fund raise that valued it at $165 billion, while earlier this month, Elon Musk's xAI Corp. raised $6 billion. They also suggest that Databricks is in no rush to go public, even though analysts predict a resurgence in initial public offerings next year.

Exclusive-Databricks nears record $9.5 billion VC raise, eyes extra $4.5 billion debt

(Reuters) - Software firm Databricks is nearing a deal that could become one of the largest venture capital funding rounds in history, as investors have shown a strong appetite to own a piece of the fast-growing data analytics firm, three sources said on Friday. The round, almost twice oversubscribed, could top $9.5 billion when it is finalized next week, exceeding the company's original goal and higher than what was discussed earlier, the sources told Reuters, cautioning the final number could still go up. The San Francisco-based company, which helps enterprises process and analyze their data, is expected to fetch a valuation of over $60 billion at a price of $92.50 per share. That price is considered a bargain in the eyes of some investors, given that the company's projected revenue for the next fiscal year is $3.8 billion, said the sources, who requested anonymity to discuss private matters. Thrive Capital and returning investors Andreessen Horowitz, Insight Partners, as well as Singaporean sovereign wealth fund GIC are expected to lead this mega round, according to one of the sources. In conjunction with the equity raise, the company is also in talks to raise $4.5 billion in debt financing, including a $2.5 billion term loan from direct lenders, one of the sources added. Bloomberg first reported on the private debt raise. Databricks, founded in 2013, is a data analytics and artificial-intelligence company. It provides a cloud-based platform to help enterprises build and govern data and AI applications. Databricks and Thrive Capital declined to comment. Insight, Andreessen Horowitz and GIC did not immediately respond to request for comment. This high-profile round would mark a jump in valuation for the 11-year-old company that has yet to make a profit. The firm was valued at $43 billion in September. The move would also be a major win for early employees, as the company plans to dedicate the funding to buy back expiring restricted stock units from early employees and cover the associated tax costs. As part of the deal, the company plans to issue preferred shares to investors participating in the round, the sources said. Databricks has benefited from the AI boom by selling more tools that help clients build and deploy AI applications using the growing volume of data they already store with the company. It competes with Snowflake, which commands a market cap of about $56 billion with expected revenue of $3.4 billion in the fiscal year ending in January 2025. The move to raise outsized funding specifically to address the expiring employee options issue, instead of adding to its balance sheet, mirrors a move by payment company Stripe, which raised $6.5 billion last year at a valuation of $50 billion. Such mega deals highlight the amount of funds available in the venture capital system and the appetite for top-notch names. Investors are doubling down on AI companies and supporting firms to remain private longer, enabling rarely seen round sizes such as OpenAI's $6.5 billion raise at a $165 billion valuation and xAI's $6 billion raise. The move signals that Databricks and other top public market candidates are in no rush to go public, despite expectations of a resurgence of venture capital-backed initial public offerings in 2025. (Reporting by Krystal Hu in Toronto, Kenrick Cai in Vancouver and Echo Wang in New York; Editing by Matthew Lewis)

Exclusive: Databricks nears record $9.5 billion VC raise, eyes extra $4.5 billion debt

Dec 13 (Reuters) - Software firm Databricks is nearing a deal that could become one of the largest venture capital funding rounds in history, as investors have shown a strong appetite to own a piece of the fast-growing data analytics firm, three sources said on Friday. The round, almost twice oversubscribed, could top $9.5 billion when it is finalized next week, exceeding the company's original goal and higher than what was discussed earlier, the sources told Reuters, cautioning the final number could still go up. The San Francisco-based company, which helps enterprises process and analyze their data, is expected to fetch a valuation of over $60 billion at a price of $92.50 per share. That price is considered a bargain in the eyes of some investors, given that the company's projected revenue for the next fiscal year is $3.8 billion, said the sources, who requested anonymity to discuss private matters. Thrive Capital and returning investors Andreessen Horowitz, Insight Partners, as well as Singaporean sovereign wealth fund GIC are expected to lead this mega round, according to one of the sources. In conjunction with the equity raise, the company is also in talks to raise $4.5 billion in debt financing, including a $2.5 billion term loan from direct lenders, one of the sources added. Bloomberg first reported on the private debt raise. Databricks, founded in 2013, is a data analytics and artificial-intelligence company. It provides a cloud-based platform to help enterprises build and govern data and AI applications. Databricks and Thrive Capital declined to comment. Insight, Andreessen Horowitz and GIC did not immediately respond to request for comment. This high-profile round would mark a jump in valuation for the 11-year-old company that has yet to make a profit. The firm was valued at $43 billion in September. The move would also be a major win for early employees, as the company plans to dedicate the funding to buy back expiring restricted stock units from early employees and cover the associated tax costs. As part of the deal, the company plans to issue preferred shares to investors participating in the round, the sources said. Databricks has benefited from the AI boom by selling more tools that help clients build and deploy AI applications using the growing volume of data they already store with the company. It competes with Snowflake (SNOW.N), opens new tab, which commands a market cap of about $56 billion with expected revenue of $3.4 billion in the fiscal year ending in January 2025. The move to raise outsized funding specifically to address the expiring employee options issue, instead of adding to its balance sheet, mirrors a move by payment company Stripe, which raised $6.5 billion last year at a valuation of $50 billion. Such mega deals highlight the amount of funds available in the venture capital system and the appetite for top-notch names. Investors are doubling down on AI companies and supporting firms to remain private longer, enabling rarely seen round sizes such as OpenAI's $6.5 billion raise at a $165 billion valuation and xAI's $6 billion raise. The move signals that Databricks and other top public market candidates are in no rush to go public, despite expectations of a resurgence of venture capital-backed initial public offerings in 2025. Reporting by Krystal Hu in Toronto, Kenrick Cai in Vancouver and Echo Wang in New York Editing by Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology Krystal Hu Thomson Reuters Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work. Kenrick Cai Thomson Reuters Kenrick Cai is a correspondent for Reuters based in San Francisco. He covers Google, its parent company Alphabet and artificial intelligence. Cai joined Reuters in 2024. He previously worked at Forbes magazine, where he was a staff writer covering venture capital and startups. He received a Best in Business award from the Society for Advancing Business Editing and Writing in 2023. He is a graduate of Duke University. Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

Data and AI Company Databricks to Raise $10 Billion in Funding Round | PYMNTS.com

Databricks has announced a Series J funding round in which it is raising $10 billion of expected non-dilutive financing and has completed $8.6 billion so far. The funding values the data and artificial intelligence (AI) company at $62 billion, Databricks said in a Tuesday (Dec. 17) press release. The round is "substantially oversubscribed," Databricks Co-founder and CEO Ali Ghodsi said in the release. "These are still the early days of AI," Ghodsi said. "We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers, and our team is committed to helping companies across every industry build data intelligence." The Databricks Data Intelligence Platform helps organizations use their data for analytics, machine learning and AI applications, according to the release. Interest in AI has accelerated Databricks' growth to over 60% year-over-year in recent quarters, the release said. The company will use the new capital to fuel new AI products, acquisitions and international go-to-market operations, to provide liquidity for current and former employees, and to pay related taxes, per the release. Databricks has emerged as "the platform of choice" for democratizing data and AI, Joshua Kushner, CEO of Thrive Capital, which is leading the funding round, said in the release. "We have witnessed the team's unrelenting execution, and consider it an honor to be partners with the company for the long term," Kushner said. It was reported Friday (Dec. 13) that Databricks was close to raising $9.5 billion in a funding round and that the feat would create one of the largest-ever venture capital funding rounds. As a data analytics firm, Databricks can sell its clients tools related to AI applications and thereby benefit from the AI boom that has seen OpenAI's $6.5 billion raise and xAI's $6 billion raise, Reuters reported Friday. HSBC Innovation Banking said Monday (Dec. 16) that 42% of U.S. venture capital was invested into AI companies in 2024, up from 36% in 2023 and 22% in 2022. When Databricks raised over $500 million in a September 2023 funding round that valued it at $43 billion, the company said in a press release that by unifying data, analytics and AI on a single platform, the Databricks Lakehouse enables customers to gain insights and build generative AI solutions faster.

Databricks Closes The Biggest Venture Round with $10 Billion Funding | AI News

The company is now valued at $62 billion and wishes to focus on AI product development and international expansion. Databricks, a data and AI company, has raised $10 billion in a funding round led by Thrive Capital. Leading venture capital firms, including Andreessen Horowitz, DST Global, GIC, and others, participated in the round. The company plans to allocate the capital raised to support AI product development, strategic acquisitions, and the acceleration of international growth. Databricks also intends to use the funds to provide liquidity to current and former employees. "This round was substantially oversubscribed, and we're excited to bring on world-class investors who believe in our vision," said Ali Ghodsi, CEO of Databricks. "AI is still in its early days, and we are committed to helping companies across industries unlock the power of their data." "It's official! The biggest venture round in history. And I feel like we're just getting started..." said Naveen Rao, VP of Generative AI at Databricks. Existing investors, Ontario Teachers' Pension Plan and new investors, ICONIQ Growth, MGX, Sands Capital and Wellington Management, have joined the funding round. Databricks stands out as one of the most eagerly awaited tech IPOs, set to accelerate innovation in enterprise data. The company expects to exceed a $3 billion annual revenue run rate and achieve positive free cash flow by January 2025. Databricks reported over 60% revenue growth in the past year, with 500+ customers generating $1 million annually. Its Databricks SQL product reached $600 million in revenue, up 150% year-over-year. Databricks is expanding globally, with new hubs in London and Singapore, and growing operations in Latin America and the Middle East. In addition to Databricks, the $120 billion database market is crowded with cloud providers like AWS, Microsoft, and Google, as well as specialised companies like Redis, MongoDB, and Snowflake. With this funding round, Databricks cements its position as a powerhouse in AI and data solutions, delivering an ecosystem for businesses. Its recent partnership with Amazon Web Services (AWS) deepens integration with AWS services, enabling scalable, cloud-based solutions for enterprises.

Insight VC describes Databricks' wild $10B deal and the bad advice the CEO ignored | TechCrunch

It's been a wild week for investors clawing their way into Databricks' record-breaking $10 billion fund raising, one of the VCs leading the deal told TechCrunch. "There were calls that went well late into the night, and that's okay, that's how good opportunities emerge," George Mathew, managing director at Insight Partners described with a grin. Along with new investor Thrive, Joshua Kushner's firm, Insight was one of the six firms who led the deal. All but Thrive were existing investors. "We worked to make sure that we could be a co-lead, despite being already an investor on the cap table," Mathew said. Insight first invested in Databricks in 2021. But to get into this enormous deal, Insight had to tap into the Insight Partners Public Equities fund, which was set up to buy public stocks, under managing director John Wolff. There was so much rabid interest that the allocation - and valuation - rose fast. In mid-November, the deal was on track to be around $8 billion, Reuters reported at the time. A few days later, it was $9.5 billion at a $60 billion valuation, and by Tuesday, it had closed at $10 billion with a $62 billion valuation. For perspective, this is bigger than OpenAI's $6.6 billion raise in October, the largest venture round of all time, "There was so much institutional demand and interest for a generational company," Mathew said. "I've been an investor at Insight for the last four years on all things related to data, AI, ML. This is the thing I live for." The investment involved a large secondary tender offer, where Databricks employees or other existing investors can sell shares. New preferred shares were issued to the new investor. Databricks didn't specify how much of the raise was secondary, except to call the $10 billion "non dilutive," which implies a good chunk. Interestingly, Databricks, founded in 2013, could have been a tragic tale. A decade ago its founders created a technology, Spark, that was key to yesteryear's "big data" trend. Spark helped enterprises analyze their in-house big data super fast. With the rise of data hosted in the cloud, the company was processing data then handing it over to other players. It could have found itself slowly relegated to an irrelevant big data feature. Databricks cofounder and CEO Ali Ghodsi (pictured) sought out advice from Mathew, who had run big data company Alteryx as COO before becoming a VC. The two had been friends since Databricks' early days. "Ali called me a few years ago and said, 'Hey, I'm thinking about going into the data warehousing market.' And I just said, 'That's the stupidest idea I've ever heard'. And I could not have been more wrong," Mathew laughs, adding he's glad Ghodsi didn't listen to him, nor hold his bad advice against him. At the time, traditional data warehouse vendors - which store vast amounts of enterprise data used for analytics - were also struggling against the likes of rising cloud stars like Snowflake and products owned by the cloud vendors, like AWS's Redshift. But, in late 2020 Databricks launched its data warehouse product anyway - Databricks SQL - and quickly became a big Snowflake competitor. Then came LLMs, which are continuously thirsty for high-quality enterprise data. "Where is this high quality data coming from? For the enterprise, it's going to come from a place like Databricks," Mathew said. Flash forward to the end of 2024, with an IPO market still locked and investors dying to get a piece of AI infrastructure products, like data warehouses that can serve LLMs. Databricks says that by the end of its fiscal fourth quarter, it will be on a $3 billion revenue run rate, with a $600 million revenue run rate for Databricks SQL, up 150% for the year.

Databricks Raises $10B In 2024's Largest Venture Funding Deal

Databricks raised $10 billion at a $62 billion valuation, marking the largest venture capital raise of 2024 and one of the largest on record -- even surpassing the $6.6 billion raised by generative AI giant OpenAI this fall. Databricks' new valuation marks a 44% increase from its 2023 valuation of $43 billion. The San Francisco-based company -- which helps businesses process, analyze, and manage large amounts of data quickly and efficiently using tools like AI and machine learning -- is now the fourth most highly valued U.S.-based startup, after OpenAI, SpaceX and Stripe. Thrive Capital led Databricks' new funding. Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management co-led the round. Databricks said other significant investors included existing investor Ontario Teachers' Pension Plan and new investors Iconiq Growth, MGX, Sands Capital and Wellington Management. "These are still the early days of AI. We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers and our team is committed to helping companies across every industry build data intelligence," Databricks CEO and co-founder Ali Ghodsi said in the funding announcement. "We're building transformative data and AI infrastructure and excited to move aggressively in service of our customers and their success." The company said it plans to use the new funds on developing new AI products, acquisitions, international expansion and providing liquidity for current and former employees. Databricks said it has grown revenue 60% year over year in recent quarters and the current quarter marks the first time it expects to hit positive free cash flow. It expects to cross a $3 billion revenue run-rate this quarter as well. While venture funding overall has been subdued this year, artificial intelligence-related startups have raised vast sums of money. After Databricks' new raise, other large deals for AI companies this year include OpenAI's $6.6 billion raise in October, a $6 billion round in May for Elon Musk's generative AI startup xAI, and $5.6 billion for autonomous driving company Waymo in October.

Databricks Raises $10B In Latest Funding Round, Reports $3B Revenue Run Rate

The company will use the new financing to fuel its rapid growth through accelerated product development, international expansion and potential acquisitions. Data and AI platform developer Databricks has raised an eye-popping $10 billion in a new round of funding that boosts the company's valuation to $62 billion, the company said Tuesday. Databricks, which remains privately held, said it has experienced 60 percent year-over-year growth in recent quarters and disclosed that it expects to surpass the $3 billion annual revenue run rate and achieve positive cash flow in the fourth quarter. The company, with its flagship Databricks Data Intelligence Platform offering, also said that it has more than 500 customers each consuming an over $1 million annual run rate and the company's Databricks SQL intelligent data warehouse has achieved a $600 million annual revenue run rate. [Related: Databricks' New Offering Promises Speedier AI, Analytical Application Development] Databricks attributed its rapid growth largely to "the unprecedented interest in artificial intelligence," the company said in a statement announcing the latest funding. "To satisfy customer demand, Databricks intends to invest this capital towards new AI products, acquisitions, and significant expansion of its international go-to-market operations. In addition to fueling its growth, this capital is expected to be used towards providing liquidity for current and former employees, as well as pay related taxes," the company said. Databricks, founded in 2013 and headquartered in San Francisco, has already made a number of acquisitions including buying generative AI platform startup MosaicML for $1.3 billion in June 2023. Last year it also acquired data governance technology provider Okera for an undisclosed sum and data replication startup Arcion for $100 million. "We were substantially oversubscribed with this round and are super excited to bring on some of the world's most well-known investors who have a deep conviction in our vision," Ali Ghodsi, Databricks co-founder and CEO, said in the statement. "These are still the early days of AI. We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers and our team is committed to helping companies across every industry build data intelligence. We're building transformative data and AI infrastructure and excited to move aggressively in service of our customers and their success." Databricks last raised funding in a $500 million Series I round in September 2023 which at the time put the company's market value at $43 billion. The new round of $10 billion in expected non-dilutive financing was co-led by new investor Thrive Capital and existing investors Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management. Other significant participants included existing investor Ontario Teachers' Pension Plan and new investors ICONIQ Growth, MGX, Sands Capital and Wellington Management. Databricks has been expanding globally over the last year, opening a European regional hub in London and Asia Pacific/Japan hub in Singapore and expanding its presence in Latin America and the Middle East.

Databricks to Hit $62 Billion Valuation in Massive Funding Round

Databricks Inc. is raising $10 billion in new funding, a massive cash injection that will bring the software maker's valuation to $62 billion. The fast growing startup "intends to invest this capital towards new AI products, acquisitions, and significant expansion of its international go-to-market operations," according to a statement released Tuesday. The capital will also be used "towards providing liquidity for current and former employees."

Databricks raises $10bn in the biggest US venture deal this year

Databricks has raised $10bn in the biggest venture capital deal of the year, giving the US data analytics and artificial intelligence company a valuation of $62bn. The company raised the cash from some of the largest and most active technology investors in the US, including Thrive Capital, Andreessen Horowitz, Insight Partners and Iconiq Growth. The funding round for the 11-year-old company is exceptionally large by the standards of venture capitalists, who historically have funded early- stage start-ups at much lower valuations. The deal is a reflection of how VCs are shifting tack as private markets balloon. Thrive alone invested "at least" $1bn into the round, according to Vince Hankes, a partner at the firm, which recently raised a $5bn fund. The "vast majority" of the $10bn will go towards helping employees at the start-up cash out lucrative stock options and to pay the taxes they incur when those options vest, according to Hankes. He compared the deal to Stripe's $6.5bn raise last year, which allowed the payments company to meet billions of dollars of tax liabilities associated with employees' stock units. Many start-ups that have remained private for a decade or more are facing a similar issue: many stock units are taxed as income when they vest, while others cannot be realised until a company has a liquidity event, leaving employees with either large tax bills or the bulk of their wealth effectively tied up. Finding ways to "release the pressure" for employees would help start-ups such as Databricks compete with public companies such as Alphabet, where employees can sell their shares at any time, said Hankes. Providing early employees a way to sell their stock has been a motivating factor behind many of the largest deals for venture-backed companies over the past year, including at AI company OpenAI and Elon Musk's SpaceX. The remainder of Databricks' new capital will be invested into "new AI products, acquisitions, and significant expansion of its international go-to-market operations", the company said on Tuesday. Other investors in the round include Singaporean sovereign wealth fund GIC; early Twitter and Facebook investor Yuri Milner's DST Global; and MGX, a recently launched UAE fund focused on AI and chaired by the country's powerful national security adviser, Sheikh Tahnoon bin Zayed al-Nahyan. Databricks has grown rapidly in the past year and was expecting annualised revenue to hit $3bn by the end of next month, the company said on Tuesday. That has pushed Databricks' valuation up from $43bn in September last year. "We were substantially oversubscribed with this round and are super excited to bring on some of the world's most well-known investors who have a deep conviction in our vision," said Ali Ghodsi, co-founder and chief executive of Databricks. "These are still the early days of AI."

Databricks secures $62 billion valuation in AI-focused funding round

(Reuters) - Databricks said on Tuesday it had secured a valuation of $62 billion after a $10 billion funding round led by Thrive Capital, highlighting the robust demand for artificial intelligence-focused startups. The data and analytics company will invest the funds in new AI products and acquisitions while expanding its international footprint. The massive fundraise highlights Silicon Valley's unprecedented appetite for companies capitalizing on the AI boom. Investment firms Andreessen Horowitz, DST Global, GIC, Insight Partners, and WCM Investment Management co-led the round. Ontario Teachers' Pension Plan, ICONIQ Growth, MGX, Sands Capital, and Wellington Management also participated. Reuters reported last week that the round could exceed the company's original goal and was higher than previously discussed earlier. (Reporting by Niket Nishant in Bengaluru; Editing by Tasim Zahid)

AI startup Databricks raises $10 bn as value soars

Young startup Databricks, which specializes in scaling and building artificial intelligence, said Tuesday it raised $10 billion, bringing the company's valuation to $62 billion. The blockbuster funding round is yet another signal of the unrelenting appetite from investors for potential AI stars. Investors listed as taking part in the funding round included tech sector powerhouses Andreessen Horowitz and Thrive Capital. "This round of financing was heavily oversubscribed, and we are delighted to welcome some of the world's most renowned investors, who share a deep conviction in our vision," Databricks co-founder and chief executive Ali Ghodsi said in a release. "We are still in the early stages of the AI Era." Founded in 2013 by students at the University of California, Berkeley, Databricks runs a cloud-based platform for companies to take advantage of artificial intelligence, including for data management. Databricks bought data management optimization company Tabular for more than $1 billion in June. The San Francisco-based company is among those that have integrated generative AI into its platform. In June, chief financial officer Dave Conte reported that the company expected to be on pace for $2.4 billion in annual revenue. That's up from the last fiscal year, which saw $1.6 billion in revenue. Databricks has so far eschewed becoming a publicly traded company. In addition to financing the company's growth, the fundraising round will enable Databricks employees to sell some of the equity they have earned in the startup.

Databricks secures $62 bln valuation in AI-focused funding round

Dec 17 (Reuters) - Databricks said on Tuesday it had secured a valuation of $62 billion after a $10 billion funding round led by Thrive Capital, highlighting the robust demand for artificial intelligence-focused startups. The data and analytics company will invest the funds in new AI products and acquisitions while expanding its international footprint. The massive fundraise highlights Silicon Valley's unprecedented appetite for companies capitalizing on the AI boom. Investment firms Andreessen Horowitz, DST Global, GIC, Insight Partners, and WCM Investment Management co-led the round. Ontario Teachers' Pension Plan, ICONIQ Growth, MGX, Sands Capital, and Wellington Management also participated. Reuters reported last week that the round could exceed the company's original goal and was higher than previously discussed earlier. Reporting by Niket Nishant in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology

Report: Databricks Close to Raising Record $9.5 Billion Amid AI Boom | PYMNTS.com

Databricks reportedly is close to raising $9.5 billion in a funding round, a feat that would create one of the largest-ever venture capital funding rounds. The final number could still go up before the round is finalized next week, Reuters reported Friday (Dec. 13), citing unnamed sources. The deal would value the company at over $60 billion, according to the report. Databricks did not immediately reply to PYMNTS' request for comment. As a data analytics firm, Databricks can sell its clients tools related to artificial intelligence (AI) applications and thereby benefit from the AI boom that has seen OpenAI's $6.5 billion raise and xAI's $6 billion raise, per the report. The company said at the time in a press release that by unifying data, analytics and AI on a single platform, the Databricks Lakehouse enables customers to gain insights and build generative AI solutions faster. "Databricks and Nvidia are building transformative AI technology, and we're excited about the business value and innovation we can bring to our customers," Databricks Co-founder and CEO Ali Ghodsi said in the release. The company said in November that it is collaborating with Enigma to deliver financial health intelligence about more than 33 million small- t0 medium-sized businesses (SMBs) to customers. The data includes monthly and annual card revenues, revenue growth, average transaction size, payment technologies used and sub-industry classifications. In October, Mastercard said it launched a generative AI-powered digital assistant using new in-house capability that was built in collaboration with Databricks, using its Data Intelligence Platform. Mastercard's new in-house capability allows it to build and deploy knowledge agent tools. Databricks said in June that it launched an AI-powered business intelligence product that is designed to enable anyone in an organization to access analytics and insights. Called Databricks AI/BI, the product features interactive dashboards and a conversational interface called Genie, both of which are powered by a compound AI system that continuously learns from usage across an organization.

Databricks, set to raise massive $10B funding round, looks to grow Seattle-area footprint

Databricks is the talk of the tech world this week as the San Francisco data and AI company is raising one of the largest venture capital deals ever. The company's $10 billion Series J funding round gives Databricks a gigantic valuation of $62 billion -- up from $43 billion last year -- in the latest sign of the frenetic AI race. Founded in 2013, Databricks helps organizations manage and analyze large volumes of data. It also provides tools to build machine learning and AI applications. More than 60% of the Fortune 500 use Databricks' products. Databricks is available on the major cloud platforms, and also competes with the likes of Amazon, Microsoft, Google, and others. The company, led by co-founder and CEO Ali Ghodsi, grew revenue in the October quarter by more than 60% year-over-year and expects to reach $3 billion in annual revenue run rate by the end of next month. Databricks has two offices in the Seattle region -- an R&D facility in Seattle, just south of downtown, and another location in Bellevue. It now employs nearly 400 people across the two offices, according to a spokesperson, and plans to grow headcount in 2025. That's up from 52 people in 2021. The Bay Area and Seattle are home to a majority of the country's AI engineers, according to a report from San Francisco venture capital firm SignalFire.

Databricks Is Raising $10 Billion, in One of the Largest Venture Capital Deals

In October, OpenAI, the start-up behind ChatGPT, raised one of the largest rounds of venture capital, bringing in $6.5 billion. On Tuesday, another artificial intelligence start-up, Databricks, announced an even bigger haul: It is set to collect $10 billion in a new funding round, which would value the company at $62 billion. The record fundings show that two years into an A.I. boom, investor enthusiasm for the technology has not waned. In recent months, some A.I. start-ups have struggled to find their footing and been sold or folded into larger companies. Even the fastest-growing companies are burning enormous sums of cash. OpenAI recently told investors that it expected to lose $5 billion this year on $3.7 billion in sales. Investors remain bullish. Databricks, which was founded in 2013 and provides software tools for storing and analyzing large amounts of online data, said it expected in January to have more than $3 billion of "revenue run rate," or monthly revenue extrapolated for a full year. It has morphed into an A.I. company in recent years, helping businesses build and operate the kind of software that drives chatbots and similar A.I. services. The San Francisco-based company also said it expected to have a "positive free cash flow" for the three months ending Jan. 31, a sign that its income was mostly outpacing its spending. The company sells its products to more than 10,000 customers, including Shell and Comcast. More than 500 customers are on pace to pay Databricks over $1 million a year for its offerings, the company said. At a valuation of $62 billion, Databricks would surpass the market capitalization of its main competitor, Snowflake, which is publicly traded. In a statement, Databricks said it had so far secured $8.6 billion of the $10 billion that it was raising. Ali Ghodsi, the chief executive and a founder of Databricks, said the rest of the round was "substantially oversubscribed." "These are still the early days of A.I.," he said. Databricks said it planned to use the money for new products, acquisitions and international expansion. It also plans to let its employees cash out some of their shares. Allowing start-up employees to sell shares before a traditional "liquidity event," such as an initial public offering or acquisition, is a growing trend among older tech start-ups. The time between a start-up raising funding and going public or selling has gotten longer over the past decade. Plentiful venture capital in the private markets means companies are under less pressure to tap the public markets for funding. That trend has been especially acute in recent years as I.P.O.s have dried up and antitrust scrutiny of big tech companies has squashed acquisitions. Some expect that I.P.O.s and deal-making will flourish next year under President-elect Donald J. Trump. But the hottest private tech companies, including Databricks, the payments firm Stripe and the rocket company SpaceX, have so much interest from private investors that they may choose to stay private and continue letting their employees and early investors cash out via private stock sales. Thrive Capital, the New York investment firm founded by Joshua Kushner, led the funding. Thrive also led OpenAI's round of funding in October. The firm, known for its early bets on Instagram, Stripe and Spotify, has been aggressively investing in the A.I. boom. In August, it raised $5 billion in new funds. Databricks' existing investors, which include Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management, also helped lead the round. (The New York Times has sued OpenAI, claiming copyright infringement of news content related to A.I. systems. OpenAI has denied the claims.) Cade Metz contributed reporting.

AI startup Databricks raises $10 bn as value soars

SAN FRANCISCO (AFP) - Young startup Databricks, which specialises in scaling and building artificial intelligence, said Tuesday it raised USD10 billion, bringing the company's valuation to USD62 billion. The blockbuster funding round is yet another signal of the unrelenting appetite from investors for potential AI stars. Investors listed as taking part in the funding round included tech sector powerhouses Andreessen Horowitz and Thrive Capital. "This round of financing was heavily oversubscribed, and we are delighted to welcome some of the world's most renowned investors, who share a deep conviction in our vision," Databricks co-founder and chief executive Ali Ghodsi said in a release. "We are still in the early stages of the AI Era." Founded in 2013 by students at the University of California, Berkeley, Databricks runs a cloud-based platform for companies to take advantage of artificial intelligence, including for data management. Databricks bought data management optimisation company Tabular for more than USD1 billion in June. The San Francisco-based company is among those that have integrated generative AI into its platform. In June, chief financial officer Dave Conte reported that the company expected to be on pace for USD2.4 billion in annual revenue. That's up from the last fiscal year, which saw USD1.6 billion in revenue. Databricks has so far eschewed becoming a publicly traded company. In addition to financing the company's growth, the fundraising round will enable Databricks employees to sell some of the equity they have earned in the startup.

Digging into the Databricks "bargain"

But it's what one told me yesterday as news broke of the big Databricks round. And I heard similar sentiments throughout the day, leading up to my Axios AI+ Summit interview with company co-founder and CEO Ali Ghodsi. But there are three issues with the "bargain." 1. Everyone could be wrong about the company's future. This is the same risk as in any VC round, although this quantum of capital inflates the consequences. Moreover, Ghodsi himself said on stage that we're in a "peak AI bubble," which suggests that this round could look expensive in hindsight, even if Databricks maintains its growth trajectory. 2. If the VCs are correct, it means that employees are selling low. Almost all of the $10 billion is going toward a nondilutive tender. Of course Databricks employees will take some money off the table -- it's the only responsible move for those without existing wealth -- but they could have sold much higher had Databricks gone public at a market price (possibly $100 billion or more). 3. Certain LPs will look askance at what was essentially a party round, given that different partygoers charge higher fees than others. A bit reminiscent of LBO club deals before the Great Financial Crisis. The bottom line: Ghodsi said that Databricks will eventually go public, possibly as early as next year, but gave no definitive calendar. Whenever that time does come, we'll all find out if this week's VC math added up.