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

Big data software specialist Databricks Inc. is reportedly closing on what Reuters described Friday 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 clamor 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 more than $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 $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.

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