Despite the current financial climate, which has seen many late-stage startups experiencing reduced valuations and funding difficulties, data analytics and AI company Databricks has raised over $500 million in a Series I funding round. This latest infusion of capital increases the company’s valuation to $43 billion, up from $38 billion in August 2021. The firm’s resilience against wider market trends underscores its strong position in the data and AI sectors.
Investors Line Up
The list of investors in this round suggests both pre-IPO and strategic interests. Financial giants such as T. Rowe Price, Morgan Stanley, Fidelity, and Franklin Templeton led the pre-IPO funding portion. On the strategic side, the round included Capital One Ventures and Nvidia. Existing investors Andreessen Horowitz and Tiger Global also participated, along with newcomers like Ontario Teachers’ Pension Plan.
The Nvidia Connection
The involvement of Nvidia underscores the strategic alignment between the two firms. Databricks has been leaning into its AI capabilities, built on its history of data analytics and machine learning software. Nvidia, a leader in AI-powered chips, finds a natural collaborator in Databricks, especially given the surging global demand for AI technologies.
Financial Milestones and Market Strategy
Databricks announced that its revenue run rate surpassed $1.5 billion as of the end of the second quarter on July 31. Additionally, the company now boasts over 10,000 global customers, with more than 300 of them generating revenue at a pace exceeding $1 million per year. Despite partial data suggesting a slowdown in revenue growth, the company reported the “strongest quarterly incremental revenue growth” in its history for its fiscal second quarter.
IPO Plans on Hold?
While the investment community is keenly watching Databricks for an IPO, the fresh funding might signal a delay in such plans. Given its effective revenue multiple of 29x, the company appears to be positioning itself for further growth before making a public offering, thereby justifying its latest valuation.
Databricks appears to be more refreshing its coffers than recharging them, suggesting strategic moves on the horizon. The firm is well-positioned to play a significant role in the growing AI market, armed with over $4 billion in total funding since its founding in 2013.
The company also recently made a splash with a significant acquisition, buying OpenAI competitor MosaicML for $1.3 billion, hinting at aggressive growth strategies in the AI sector.