Databricks secures $500M more and growing its valuation to $43B despite late-stage gloom
Databricks, a company specializing in data analytics and AI software, has completed a Series I funding round, which raised over $500 million. Despite the current funding slowdown that has resulted in many late-stage startups seeing their valuations decrease, Databricks managed to increase its valuation to $43 billion. This recent funding round is significant and highlights that industry trends do not affect all companies equally. In August 2021, the company raised $1.6 billion and had a post-money valuation of $38 billion. Databricks added $5 billion to its valuation, demonstrating its continued growth and success.
The group of investors involved in Series I is a blend of pre-IPO funding and strategic investment. T. Rowe Price, Morgan Stanley, Fidelity, and Franklin Templeton invested in the company as they often invest in firms expected to go public soon. On the strategic side, Capital One and NVIDIA provided capital.
It’s easy to see the connection between Databricks and NVIDIA – Databricks has been focusing on its AI capabilities, which it has built upon its history of selling data and machine learning software. Meanwhile, NVIDIA has benefited from the high demand for its chips and AI-powered software. Some countries are even working to secure a stable supply of NVIDIA chips for their economies. Apart from Andreessen Horowitz and Tiger Global, other conventional private-market investors participated in Series I.
Databricks has recently achieved an up-round in a market with more conservative revenue multiples. The company has reported that it surpassed a revenue run rate of $1.5 billion in the second quarter and boasts over 10,000 customers globally, among which are over 300 that generate revenue of $1 million or more per year for the company’s software and services.
Although the company’s revenue growth is slowing down according to partial data disclosed a couple of months ago, Databricks has also announced that it achieved the most substantial quarterly incremental revenue growth during the fiscal second quarter.
Considering these factors, investors are optimistic about the company’s potential to surpass the $43 billion price tag when it goes public.
Databricks may not be rushing towards a public offering, which may disappoint those eager to see its S-1 filing. The company’s adequate revenue multiple is 29x, making it too expensive for the current market. This suggests that the company may need to grow more before it can defend its latest valuation in the public market. Therefore, an IPO may likely happen later.
Databricks has recently raised fresh capital, but it seems more like a refresh than a recharge since the company needed more cash. This new round of funding may provide more room for strategic moves. There is a race among tech companies to gain a share of the potentially huge AI market. With half a billion dollars in capital, Databricks will have the resources to pursue its ambitions.