Databricks Raises $5-8 Billion in Latest Funding Round, Values Company at $55 Billion
San Francisco-based Databricks, one of the world’s most valuable private tech companies, is raising at least $5 billion in its latest funding round, with the potential to raise up to $8 billion, according to sources familiar with the matter. The latest raise would value the company at $55 billion, making it one of the largest funding rounds of the year.
The funding is designed to help Databricks employees sell shares, reducing pressure from employees to cash out and making a liquidity event such as an IPO less urgent. Despite this, the company could still go public in the back half of next year.
Databricks was founded in 2013 and sells software that helps enterprises organize data and build their own generative AI products. The company uses machine learning to help clients from AT&T to Walgreens parse and make sense of massive troves of data.
The latest funding round comes as the company has capitalized on the momentum in artificial intelligence, acquiring MosaicML, a $1.3 billion software startup that focuses on large language models that can churn out natural-sounding text. Databricks told investors earlier this year that annualized revenue would hit $2.4 billion by the midpoint of 2024.
The company’s decision to stay private comes as software stocks have struggled to get out of a rut brought on by higher interest rates. Shares of rival Snowflake are down 13% this year, while Databricks has grown its value while expanding its employee base.
CEO Ali Ghodsi has said that the company is optimizing for its success over the next decade or two, rather than optimizing for an IPO. If Databricks were to go public, it could happen in the mid-next year, according to Ghodsi.
