Databricks, which specializes in data analytics and AI solutions, is raising at least $5 billion in a new funding round that will send its valuation soaring to $55 billion, according to sources close to the matter. A source said the San Francisco-based company could raise as much as $8 billion. This round could become the biggest of the year: bigger than OpenAI raised in October when it bagged $6.6 billion.
The funding round is mainly to allow Databricks employees to sell shares, thereby giving them liquidity and relief from the pressure of going public. This would also slightly take off the pressure to go for an initial public offering, although one insider told that a public offering is still possible sometime in the second half of 2025. The investment also pushes back the timeline for the company’s IPO, which had been eagerly awaited given its status as one of Silicon Valley’s most valuable private startups.
Databricks is a product company established in 2013, developing and selling enterprise software for organization-wide big data management and analysis and, hence aiding generative AI product development. Among Databricks’s important clients is AT&T and Walgreens. Its technology works with machine learning to gather insight from pools of vast amounts of data, an approach that put Databricks in a position in the leading forefront in the development of artificial intelligence.
The company’s latest round of funding is part of a broader trend in AI, with one-third of venture capital dollars this year allocated to AI startups, according to CB Insights. In addition to this funding, Databricks recently acquired MosaicML, a $1.3 billion AI startup specializing in large language models.
While there are general challenges for the software stock, including difficulty with a higher interest rate, Databricks seems to still grow. Its annualized revenue is at $2.4 billion by mid-2024. Its investors include names like Nvidia, Capital One, Andreessen Horowitz, and Fidelity.
CEO Ali Ghodsi has said that the company is more concerned with long-term success than short-term IPO timelines. Speaking at a recent conference, he said that even though an IPO could occur as early as mid-2025, Databricks is focusing on growth and sustainability for the future.
This latest funding round, coming after a $500 million raise at a $43 billion valuation, marks the commitment of Databricks to expand its reach into the rapidly evolving AI market while delaying its IPO plans for now.
