Ali Ghodsi, co-founder and CEO of Databricks Inc., speaks during a television interview with Bloomberg Technology in San Francisco on October 22, 2019.
David Paul Morris | Bloomberg | Getty Images
One of the world’s most valuable private tech companies is raising billions more in cash and is in no rush to go public, sources told CNBC.
San Francisco-based Databricks is raising at least another $5 billion in its latest funding round, though it could raise up to $8 billion as the round is still ongoing, according to several people familiar with the matter who asked not to not to be mentioned by name because the discussions were private. The latest raise would value the company at $55 billion and could surpass the largest round of the year, by OpenAI.
The latest funding is aimed at helping Databricks employees sell shares, one of the people said. Reducing employee pressure to cash out also reduces the need for a liquidity event such as an IPO. One source said the funding round makes Databricks’ long-awaited public debut less urgent. But it could still happen in the second half of next year.
Founded in 2013, Databricks sells software that helps companies organize data and build their own generative AI products. It uses machine learning to help customers from AT&T to Walgreens analyze and make sense of massive amounts of data.
This equity round could be the largest in a banner year for artificial intelligence funding, when 1 in 3 venture dollars goes to an AI startup, according to CB Insights. OpenAI holds the record in 2024, raising $6.6 billion in October at a $157 billion valuation.
Databricks last raised $500 million at a valuation of $43 billion. It is supported by Nvidia, Capital OneAndreessen Horowitz, Baillie Gifford, Fidelity, Insight Partners, Tiger Global and others.
The information first reported that Databricks raised money.
The company has benefited from the momentum in artificial intelligence. This summer it acquired MozaïekML, a $1.3 billion software startup focused on large language models that can produce natural-sounding text. Databricks told investors earlier this year that annualized revenue would reach $2.4 billion by mid-2024.
The decision to remain private comes as software stocks struggle to get out of the rut caused by higher interest rates. Shares of competitor Snowflake have fallen 13% this year. While fellow software IPO candidates like Stripe have made significant valuation cuts, Databricks has increased its value while expanding its workforce.
CEO Ali Ghodsi said at a conference on November 20 that he is optimizing for Databricks’ success over the next decade, not an IPO.
“If we were to go, it wouldn’t be until the middle of next year at the earliest, or something like that,” Ghodsi said at Newcomer’s Cerebral Valley AI Conference. “So, you know, it could happen next year.”
A spokesperson for Databricks declined to comment.
Correction: OpenAI raised $6.6 billion in October at a valuation of $157 billion. An earlier version of this article incorrectly displayed the appraisal amount.