Artificial intelligence and analytics firm Databricks announced Thursday it raised more than $500 million in a Series I funding round including a new strategic investor in AI leader Nvidia, as Databricks gears up for one of the most anticipated initial public offerings in years.
The T. Rowe Price-led capital raise values the company at $43 billion, up from its $38 billion valuation following its Series H round in August 2021.
The latest fundraising round makes Databricks the eighth-most valuable private company in the world, according to Crunchbase data.
Databricks, which uses machine learning to drive its cloud-based data storage and processing software, is “super excited” to expand its partnership with Nvidia and “double down even more on generative AI,” Databricks’ billionaire CEO Ali Ghodsi told Forbes in an interview.
Ghodsi said the fresh funding round does not affect the timeline of when the company will file to go public, a teaser that comes as the IPO market heats up for the first time in years with fellow multibillion-dollar tech names like Arm, Instacart and Klaviyo set to go public this month.
Databricks is “looking” at how the market embraces the most notable stretch of IPOs since 2021, but the company won’t be the “first movers,” waiting for the macro environment to get over the trepidation “hump” with elevated inflation and interest rates impacting growth.
What To Watch For
If and when Databricks files for IPO, it will serve as a bellwether for the health of the global IPO market, according to David Erickson, a professor at the University of Pennsylvania’s Wharton School of Business, who previously headed Barclays and Lehman Brothers’ equity capital markets teams. Databricks “could be a more telling sign of how the IPO market is” than companies like Arm and Instacart going public this month, Erickson told Forbes, noting that it’s likely the company needs a few quarters to “digest” its recent $1.3 billion acquisition of generative AI startup MosaicML.
Databricks was founded in 2013 by Ghodsi and six other researchers at the University of California, Berkeley. Forbes named Databricks as the No. 2 company on its Cloud 100 list of the top private cloud computing companies last month, trailing only ChatGPT parent OpenAI. Databricks’ Series I funding round also included commitments from new investors Capital One and Nvidia and existing investors Andreessen Horowitz and Tiger Global. Bloomberg reported last month about new funding valuing the company at $43 billion.
Since the November public release of ChatGPT, “there has been an absolute awareness revolution in the market,” said Ghodsi. “Everyone suddenly sort of woke up and realized, what frankly, we’ve known for a long while, which is that AI has enormous transformative power.”