Databricks is reportedly close to finalizing a $9.5 billion – or greater – funding round.
The 11-year-old biz, which supplies a platform that combines data lakes and data warehouses, has grown revenue at a furious clip as it vies with publicly-owned Snowflake to become the dominant player. It has secured nine funding rounds to date, raising more than $4 billion, and according to Reuters could this week ingest the biggest investment in its history, potentially topping $9.5 billion.
Databricks – valued at $38 billion in 2021 – claimed it achieved a $350 million annual recurring revenue (ARR) in 2020 and a $1 billion ARR in late 2022. Its valuation ballooned to $43 billion when it raised $500 million in September last year. Funding was used, in part, to pay for something of an acquisition spree:
- October 2021 – 8080 Labs – no-code data analysis tool,
- April 2022 – Cortex Labs – open-source platform for deploying/managing ML models,
- Oct 2022 – DataJoy – ML-based revenue intelligence software,
- May 2023 – Okera – AI-centric data governance platform,
- June 2023 – Rubicon – storage infrastructure for AI,
- June 2023 – Mosaic – Gen AI model builder,
- June 2024 – Tabular – Apache Iceberg open table management technology
Reuters reported in November that Databricks was seeking to raise up to $8 billion, giving it a valuation of $55 billion but this has since risen to $9.5 billion, and the estimated valuation has swelled to $60 billion. The format is thought to be a secondary share sale so that employees could sell stock options, and early investors could cash out as well. It is believed that some of the incoming funds would be used to cover the tax costs on these stock sales.
There is said to be strong demand from potential investors with the round looking to be twice over-subscribed ahead of an IPO in early 2025 or early 2026.
At the time of Databricks $500 million raise last year, Alan Tu, Lead Private Equity Analyst for investor T. Rowe Price Associates, said: “Data and AI have rapidly become the centerpiece of many business strategies. Databricks has not only pioneered the Lakehouse category with a world-class team and product, but it is now also at the forefront of Generative AI for the enterprise.”
Since then the business prospects for providing Gen AI’s large language model (LLM) services, big data analytics and storage on one platform are seen as so immense.
A $60 billion Databricks’ valuation is line with its main competitor, Snowflake, which currently has a $56.93 billion market capitalization.
Bloomberg is reporting that Databricks could be trying to arrange a $2.5 billion term loan alongside the funding round.
