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Databricks is reportedly seeking to raise at least $5 billion in an equity funding round at a valuation of $55 billion. The deal, reported by The Information, would allow employees to cash out a portion of their shares.
Databricks was founded 11 years ago as the commercial venture behind Apache Spark, the powerful data processing framework that succeeded Apache Hadoop at the center of the big data world. Since then, Databricks has significantly widened its repertoire, and today it’s one of the premiere cloud-based data platforms providing big data management, advanced analytics, and AI capabilities to the world’s largest firms.
Long eyed as a top prospect for a massive initial public offering (IPO)–perhaps something on the order of the September 2020 debut its chief rival, Snowflake, which was hailed as “the largest software IPO ever”–Databricks instead has stuck to the private markets.
In September 2023, it raised half-a-billion dollars at a $43 billion valuation in a Series I round led by Nvidia and T. Rowe Price. That brought its total funding amount to $4 billion across several rounds backed by Andreessen Horowitz, Baillie Gifford, Fidelity, Insight Partners, and Tiger Global, among others.
That Series I round was seen as a pre-IPO raise. However, it appears that Databricks, which reportedly was on pace to record $2.4 billion in revenue this year, once again is headed back to the private markets for more cash.
Databricks CEO Ali Ghodsi delivers a keynote at Data + AI Summit 2024
According to a story in The Information, which first reported on the tentative deal, the San Francisco AI and analytics company is seeking to raise between $5 billion and $8 billion. The deal reportedly would be structured as a secondary share sale in order to enable existing shareholders to sell some of their holdings without resorting to an IPO.
Those figures put Databricks on the cusp of having the largest venture capital funding round of all time. The record belongs to OpenAI, which raised $6.6 billion at a $157 billion valuation last month. Elon Musk’s AI startup, xAI, raised $6 billion in a Series B earlier this year at a reported $40 billion valuation, and raised another $5 billion in a venture round this month, according to data from Crunchbase.
Databricks has used its cash holdings to make strategic acquisitions to grow its data and AI business. In the summer of 2023, the company spent $1.3 billion to acquire MosaicML, which developed an AI factory that creates GenAI models. Earlier this year, it shelled out between $1 billion and $2 billion to acquire Tabular, the commercial venture behind the open source Apache Iceberg project.
While a Databricks IPO hasn’t yet come to pass, it’s still a possibility. At the Newcomer’s Cerebral Valley AI Conference last week, according to CNBC, CEO Ali Ghodsi said: “If we were going to go, the earliest would be, let’s say, mid-next year, or something like that…So, you know, could happen next year.”
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