Databricks nears 9.5 billion mega-investment

With an estimated market value of $60 billion, Databricks is performing well. The company is expected to raise $9.5 billion through venture capital investors this week.

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Databricks’ ambitions are significant. After establishing a successful architecture for AI workloads with its lakehouse, its sights are now set on the analytics market. Expanded capabilities for driving GPUs, major changes to the Data Intelligence Platform, and a rapidly growing Databricks SQL all reflect its new ambitions and promises. We wrote about it extensively last July based on Databricks’ Data + AI Summit:

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Read more: After the AI world, Databricks now wants to change the analytics market

Money needed

While recurring revenue from projects like Databricks SQL is already promising ($400 million in that case), more significant money streams are needed to build momentum for the new projects. Venture investors Thrive, a16z, Insight, and GIC will lead a giant investment round. This week, Databricks plans to add $9.5 billion to its war chest as a result, almost double the initial target for this round.

Investors are positive, evidenced by Databricks’ valuation being jacked up as talks have gone on. In late November, Reuters sources mentioned the company’s value nearing $55 billion, compared to $60 billion today. In addition, the amount to be raised was lower then: $8 billion. Nonetheless, investors are talking about a bargain for the VC firms, as $3.8 billion in annual revenue seems expected to be brought in.

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In addition to the mega-investment from venture capital, Databricks is also seeking a loan. $2.5 billion is said to be sought through direct lenders, while an additional $2 billion in debt financing is planned.

Not yet profitable

The good news for Databricks aside, even better performance will be expected over time. Even though the company has been around for 11 years, no quarter has yet been profitable. That’s not surprising or unusual when it comes to impactful tech firms, especially when hefty investments are required to establish a competitive position in the market. But in the long run, lenders and Databricks itself will be looking for green numbers, perhaps if the all-encompassing AI hype turns into all-encompassing AI adoption in the coming years.

Tip: Databricks moves from lakehouse to data intelligence