Databricks Nears $55 Billion Valuation With New Multi-Billion Dollar Funding

Databricks is in no rush to go public as it is currently raising at least $5 billion in cash, which could give it a valuation of $55 billion.

The San Francisco-based AI startup could even raise the amount to $8 billion since the funding round is still ongoing, CNBC reported citing individuals who were familiar with the matter.

The latest funding round will help the company's employees to sell shares. This will then reduce the pressure from its employees to cash out and avert liquidity event such as IPO.

The firm would raise the funds by selling its secondary shares, an event where early investors and employees are allowed to cash out some of their stock holdings. It would also be used to cover the tax cost associated with the share sales, which could cost billions, Reuters reported.

The company is already regarded as among the most valuable startup companies of Silicon Valley and viewed as a potential IPO candidate. However, with the latest funding, the prospect of taking the company public becomes remote, albeit not necessarily improbable since it could still happen in the second half of 2025.

The funding for Databricks may be the largest in a year for AI funding. OpenAI holds the highest figure for this year, having raised $6.6 billion in October, with a $157 billion valuation. The funding came from a host of investment firms along with Big Tech companies such as Microsoft, Nvidia, SoftBank and more.

The last time that Databricks was able to raise funding amounted to $500 million at $43 billion valuation. In that funding round, backers included Capital One, Nvidia, Fidelity, Tiger Global, Insight Partners, Andreessen Horowitz and Baillie Gifford.

The firm grounded its moves on the momentum that artificial intelligence has been getting for quite some time now. Just this summer, the company acquired MosaicML in $1.3 billion deal. Mosaic develops large language models that can produce "natural-sounding text."

In a conference on Nov. 20, Databricks' CEO Ali Ghodsi said that he was optimizing for the company's success in the next decade and IPO is not among them.

"If we were going to go, the earliest would be, let's say, mid-next year, or something like that," Ghodsi stated at the Newcomer's Cerebral Valley AI Conference.

Founded in 2013 by researchers from UC Berkeley, Databricks emerged from the Apache Spark open-source project, a groundbreaking tool for big data processing. Databricks software helps companies in building their own generative AI products. It provides a unified platform for data engineering, machine learning, and analytics.

The company serves over 10,000 organizations worldwide, including big firms like Shell, Comcast, and HSBC, and partners with cloud giants such as AWS, Microsoft Azure, and Google Cloud. Databricks, which operates on a subscription-based model, projects revenue to hit $2.4 billion by fiscal 2025.