Databricks has closed one of its largest funding rounds in history, raising an incredible $10 billion in new capital. Naturally, technology investors were quick to ask what this meant for the company's long-awaited IPO. At an event in San Francisco on Tuesday night, Databricks CEO Ali Ghodsi explained why the company is waiting until at least 2025 to go public.
“This was an election year. We were looking for some stability, people are worried about interest rates, they're worried about inflation… So we thought it would be stupid to do an IPO this year, so we didn't make the mistake.” I said I'm going to wait and see,” Godi said in an interview with Dan Primack on Axios AI. Summit. “The earliest theoretical possibility for an IPO is next year, but there will be a lock-up period after that, which would be too long for employees to have liquidity.”
Databricks is using this “Series J” to allow early employees to extract cash and continue to grow. Although 2024 was uncertain in many ways, the IPOs of ServiceTitan, Reddit, and other companies were largely successful.
But why take the risk when you can raise as much money as Databricks?
Godici said the latest round could nearly double the funding it just closed. We knew investors were eager to get in, and that enthusiasm drove Databricks' stock price higher. The data analytics company was originally looking to raise between $3 billion and $4 billion in this round, Gozi said, but reports about the fundraising activity sparked interest.
“I looked at this Excel sheet that kept a tally of all the people who wanted to invest, and I almost fell off my chair because there was $19 billion in interest,” Godi said. . “And we hadn't even talked to everyone. I thought, 'Oh my god, that's a huge number.' So we actually raised the price. ”
Even after the impressive fundraising, Godi hasn't ruled out a 2025 IPO for Databricks. However, he said it could happen as early as 2026. As this record-breaking round shows, going public is far less important than it was 10 to 15 years ago, but it's still something the company wants to do, he said. But Godoshi isn't trying to make an IPO happen before what he calls the “AI bubble” bursts.
“So we’re at the peak of the AI bubble, and it doesn’t take a genius to know that this is a company with five employees, just new hires, with no product, no innovation, no intellectual property. [is not] It’s worth hundreds of millions, sometimes billions,” Godoshi said. “Start-up companies with nothing get valued in the billions of dollars. That's a bubble.”
The Databricks CEO didn't say what kind of startups he was talking about, but we've certainly seen a lot of AI unicorns this year. But none of this seems to worry Gozi, who says his company and its reputation will stand the test of time. He believes his company has already won its first big battle with another data analytics startup, Snowflake.
“We had a program called 'SnowMelt,'” Ghodsi said, confirming reports about efforts within Databricks to steal business from Snowflake. “We were chasing snowflakes and demonizing them, but that's behind us.”
This effort to demonize Snowflake came at a steep price, with Databricks reportedly paying $2 billion to acquire a small startup called Tabular. Snowflake also reportedly wanted to acquire Tabular, even though the company had only $1 million in annual recurring revenue at the time.
Now, Databricks is chasing larger competitors with products that rival those of enterprise giants like Salesforce and Microsoft. Godoshi says data and AI will continue to play a slightly more important role in people's lives year after year, and believes his company is well-positioned to fill that niche.