Databricks shakes VC money tree and $500M falls out

Databricks has inhaled $500 million in funding – giving the data platform provider a nominal $43 billion valuation.

In lieu of a much-delayed IPO, the company – initially built around the Apache Spark project – received a cash injection led by funds and accounts advised by T.Rowe Associates, which is joined by other existing vendors including Andreessen Horowitz, Baillie Gifford, Nvidia, and more.

Ali Ghodsi, co-founder and CEO of Databricks, said the Series I funding “reflects Databricks’ continued momentum, the rapid customer adoption of the Databricks Lakehouse” as well as the move to a unified data platform.

The Databricks Lakehouse combines the unstructured approach of data lakes with SQL-friendly data warehouses and a machine learning workbench.

“Databricks and Nvidia are building transformative AI technology, and we’re excited about the business value and innovation we can bring to our customers,” Ghodsi said.

The company mooted the idea of an IPO in 2021 when Ghodsi told The Register the company aimed to be “IPO-ready” that year. However, the lack of a favorable launch environment and ample VC cash runway meant the business was happy to hold off.

The company took a $1 billion Series G investment round in February 2021, giving it a paper valuation of $28 billion, while in August that year it took $1.5 billion in funding for its Series H.

Databricks said it reached $1.5 billion revenue for the second quarter, up by more than 50 percent year-on-year, although these figures are not audited in the same way as those public companies disclose. The company said it ended the quarter with more than 10,000 global customers including AT&T, Shell, Rolls-Royce, GSK and Toyota.

A team of academics that met at Berkeley founded Databricks in 2013, including computer scientist Matei Zaharia, who developed Spark as a PhD thesis in 2009 and later co-created the Apache Mesos cluster manager.

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In 2019, Databricks introduced Delta Lake, an open source project designed to address data lake reliability and addressability issues, which had caused the unflattering description of “data swamp” to gain traction. In February 2020, it launched the term “lakehouse” into the technology lexicon and the term has become widely used across the industry.

Tech IPOs have returned to investment markets with ecommerce provider InstaCart struggling to convince backers with its launch and UK-founded chip designer Arm launching today with shares being offered to the public at $51 apiece, putting a value on the company of $54.5 billion, lower than the $60-$70 billion that Japanese owner Softbank was said to be aiming for.

With uncertainty over IPOs remaining and ample cash at its disposal, the only question for Databricks is whether VC appetite will run out before they get through the letters of the alphabet. ®