Databricks Raises Over $500 Million at $43 Bln Valuation

Databricks, a data analytics platform that uses artificial intelligence (AI), said on Thursday it secured more than $500 million in a funding round that valued the company at $43 billion. The new round, led by investment manager T. Rowe Price, could mark the last private funding round as the data company gears up for the public market. Valuation plays a crucial role in the startup ecosystem as it determines a company’s perceived worth and potential for future growth. In the current fundraising climate, where startups have been cutting valuations amid waning investor confidence in the sector, Databricks’ ability to maintain its valuation despite a funding slowdown is a solid testament to the company’s position and growth prospects.

For Databricks, the latest valuation translates into about $1.5 billion in annual revenue. That puts the company in the same league as big data software companies Snowflake and BigQuery, which both have more than a billion-dollar run-rates. It also ties it with AI and machine learning software makers like Nvidia (NVDA.O), which is gaining momentum as companies look to boost productivity by automating tasks and enhancing their business processes with the help of machine learning algorithms.

Ghodsi, who took over as CEO in 2021, says that he’s “incredibly bullish” about the future of Databricks. But he didn’t disclose any up-to-date revenue figures.

He did say that he has a long list of interested investors, including institutional money managers and family offices. He added that the new funding will be used to expand Databricks’ partnerships and develop a broad catalog of industry solutions.

A potential IPO is on the roadmap, but Ghodsi did not provide an ETA for when that might happen. He also should have disclosed whether the company would go through a traditional IPO or an alternative route called direct listing that allows the company to choose its shareholders.

Many tech companies are poised to debut soon. Chip designer Arm is returning to the public market on Thursday. At the same time, grocery delivery firm Instacart and software program vendor Klaviyo filed their prospectuses last month. Those offerings starkly contrast the bleak mood that has led massive prospective buyers to restrict spending and postpone purchases due to concerns about the economy and global trade tensions. Ghodsi said that while he expects the broader business environment to improve, that doesn’t mean it will be a smoother road for companies looking to launch this year. That’s why he has invested heavily in hiring and building out his team to help prepare the company for the coming wave of potential customers.

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