According to reports, data analytics company Databricks is seeking to raise at least $5 billion in a funding round, which would value the company at $55 billion. This deal will allow the company's employees to cash out some of their shares.
Founded 11 years ago, Databricks initially commercialized the powerful data processing framework Apache Spark and has since expanded its business to become one of the world's leading cloud data platforms, offering big data management, advanced analytics, and artificial intelligence capabilities to numerous large enterprises.
Databricks has long been seen as a company poised for a large initial public offering (IPO), especially after its competitor Snowflake set the record for "the largest software IPO ever" when it went public in September 2020. However, Databricks has opted to raise funds in the private market. In September 2023, Databricks successfully raised $500 million in a Series I funding round led by Nvidia and T. Rowe Price, reaching a valuation of $43 billion. This brought its total funding raised across multiple rounds to $4 billion, with participating investors including Andreessen Horowitz, Baillie Gifford, Fidelity Investments, Insight Partners, and Tiger Global.
Despite anticipating $2.4 billion in revenue this year, Databricks has again chosen to return to the private market for additional funding support. According to The Information, Databricks is seeking between $5 billion and $8 billion in financing, with the transaction taking the form of a secondary share sale to allow existing shareholders to sell part of their holdings without going through an IPO.
If this funding is successful, Databricks could become the largest venture capital funding round in history. The current record is held by OpenAI, which raised $6.6 billion last month, with a valuation of $157 billion. Meanwhile, Elon Musk's AI startup xAI raised $6 billion in a Series B funding round earlier this year and completed another $5 billion funding round this month.
Databricks is also utilizing its cash reserves for strategic acquisitions to expand its data and AI business. In the summer of 2023, the company acquired MosaicML, a developer of AI model generation factories, for $1.3 billion; earlier in the year, it acquired Tabular, a commercial company based on the open-source Apache Iceberg project, for between $1 billion and $2 billion.
Although Databricks has not yet gone public, it remains a possibility for the future. According to CNBC, at the "Brain Valley AI Conference for Newcomers" held last week, CEO Ali Ghodsi stated, "If we are going public, it would be no earlier than mid-next year... So, this could indeed happen next year."
Key Points:
🤑 Databricks plans to refinance $5 billion at a $55 billion valuation, allowing employees to cash out some shares.
🚀 The company has raised a total of $4 billion and is still seeking further funding support.
📈 The CEO indicated that if an IPO occurs, it could happen as early as mid-next year.