Databricks Raises $10bn In Huge AI Funding Round

Data analytics and AI company Databricks has announced a $10 billion (£7.9bn) round of financing valuing the firm at $62bn, in one of the largest-ever venture capital funding rounds.

The funding is larger than OpenAI’s $6.6bn round concluded in October, valuing the start-up at an eye-watering $157bn, and underscores investors’ appetites for AI-focused start-ups.

Founded in 2013, Databricks pioneered the concept of a data warehouse that also acts as a data lake, allowing organisations to manage and use both structured and unstructured data for business analytics as well as AI workloads.

Its software is available on the cloud platforms of Amazon, Google and Microsoft, who are also competitors.

‘Early days of AI’

Databricks was previously valued at $43bn in a funding round last year.

Competitor Snowflake had a market capitalisation of about $57bn as of Tuesday’s close.

“These are still the early days of AI,” said the start-up’s co-founder and chief executive Ali Ghodsi.

He added that the round was “substantially oversubscribed”.

Databricks plans to use the funding to provide liquidity to current and former employees, in other words allowing them to cash out their stock, which provides a major part of compensation at tech start-ups.

The funding will also be used to make acquisitions and expand overseas, the firm said in a statement.

It said it expects to generate positive free cash flow for the first time with a $3bn revenue run rate in the quarter ending 31 January.

Elite investors

For the October quarter Databricks’ revenue grew more than 60 percent year-on-year.

The round was led by Thrive Capital, with participation from major venture capital funds Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management, along with existing backer Ontario Teachers’ Pension Plan and new investors ICONIQ Growth, MGX, Sands Capital and Wellington Management.

Databricks’ 10,000 customers include Block, Comcast, electric vehicle maker Rivian and energy multinational Shell.