Dec 14, (V7N) - San Francisco-based data analytics firm Databricks is on the brink of closing a landmark funding round that could exceed $9.5 billion, making it one of the largest venture capital investments in history, according to sources. This mega-round, nearly twice oversubscribed, reflects investors’ growing appetite for AI and data-centric companies.

Valuation Soars Beyond $60 Billion

Expected to finalize next week, the deal would value Databricks at over $60 billion with shares priced at $92.50 each—a figure viewed as a bargain by many investors, considering the company’s $3.8 billion projected revenue for the next fiscal year. This marks a significant leap from its previous valuation of $43 billion in September.

Key investors include Thrive Capital, Andreessen Horowitz, Insight Partners, and Singaporean sovereign wealth fund GIC. In addition to equity funding, Databricks is negotiating $4.5 billion in debt financing, including a $2.5 billion term loan from direct lenders.

Focus on Employee Benefits

U like traditional funding rounds aimed at expanding balance sheets, a portion of this capital will address employee-related concerns. The company plans to use the funds to buy back expiring restricted stock units (RSUs) from early employees while covering associated tax costs. This strategy mirrors moves by companies like Stripe, which raised $6.5 billion in 2022 for similar purposes.

AI Boom Driving Growth

Founded in 2013, Databricks has been a major beneficiary of the AI boom, offering tools that help enterprises analyze data and develop AI applications. It competes with industry heavyweight Snowflake, which boasts a market cap of $56 billion and projected revenue of $3.4 billion in 2025.

Databricks’ continued private fundraising success reflects a broader trend among AI-driven firms like OpenAI and xAI, which have raised $6.5 billion and $6 billion, respectively. Such rounds indicate a preference for staying private longer, despite speculation about an uptick in venture-backed IPOs by 2025.

Implications for the Tech Landscape

This outsized deal underscores the abundance of capital in the venture system and investors' focus on top-tier AI and analytics companies. With significant funding secured, Databricks is poised to solidify its leadership in data and AI technology, further intensifying its rivalry with Snowflake and similar firms.

As the tech sector leans heavily into AI and data innovation, Databricks’ ability to scale and navigate its competitive landscape will be closely watched.

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