The rumor has been circulating for a long time, and now it has been confirmed. The data lake specialist is leading a major fundraising campaign: $10 billion in non-dilutive funding has been raised and $8.6 billion has already been raised to date. This Series J values Databricks at $62 billion. The funding round was led by six companies: 5 existing shareholders (Andreessen Horowitz, DST Global, GIC, Insight Partners, and WCM Investment Management) and 1 new entrant (Thrive Capital).
A secondary takeover offer prior to an IPO
Other investors include Ontario Teachers’ Retirement Plan historic shareholders as well as new entrants including ICONIQ Growth, MGX, Sands Capital and Wellington Management. “This fundraising has been largely covered.”Say hello to Ali Ghodsi, Co-Founder and CEO of Databricks. according to TechCrunchThe money will largely come from a secondary tender offer, meaning Databricks’ existing shareholders (including its employees) resell a portion of their shares.
This type of operation is closer to an IPO than to a classic fundraising, the difference being that only some shareholders get paid. The question of an IPO is more relevant today than ever for Databricks, and it is clearly only a matter of time.
In search of profitability since 2013
Although the company has seen accelerated growth — more than 60% in the third quarter compared to the previous year — it remains unprofitable. It hopes to generate positive cash flow for the first time for the fourth quarter (ending January 31, 2025) and is targeting annual revenues exceeding $3 billion.
The past few quarters have been particularly good, mainly due to growing business interest in artificial intelligence. However, to keep up, Databricks must continue its investments “In new AI products, acquisitions and expanding its international operations”. To date, the company also claims to have over 500 clients, each generating over $1 million in annual revenue.
Chain acquisition strategy
In recent years, Databricks has pursued a strategy of acquiring companies, especially startups, to revamp its solution portfolio and thus avoid developing some of them itself. This year alone, it acquired three companies: Einblick, Lilac Eye And my schedule.
The latter is also considered Contempt for her closest competitor :Snowflake. The startup provides a data storage and management platform capable of competing with Polaris Catalog, a similar solution developed internally by Snowflake and unveiled last June during its annual conference.
2023 was marked by the same pace of acquisitions, with Databricks most notably purchasing MosaicML for a modest $1.3 billion. The amount was surprising, and for good reason: The purchase price was six times higher than the startup’s last valuation. For your information, MosaicML It allows companies to train large language models using their own data.
If today it seems that Databricks has a full range of solutions available to its customers, the fact remains that it is slow to find a place in the AI market. Its data intelligence platform, which is described as a platform for “Democratizing access to data and artificial intelligence”is built on open data formats, with a strong point of cost optimization and risk management. This is why it has to invest a lot to remain competitive with the competition.
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