Databricks Nears Record Venture Capital Deal

By Krystal Hu, Kenrick Cai, and Echo Wang

(Reuters) – Software firm Databricks is approaching a deal that could become one of the largest venture capital funding rounds in history, with strong investor interest in the fast-growing data analytics firm, say three sources.

The round is nearly twice oversubscribed and could exceed $9.5 billion when finalized next week, surpassing the company's original target and earlier discussions. However, sources caution that the final amount may still increase.

Based in San Francisco, Databricks aids enterprises in processing and analyzing data and is projected to have a valuation over $60 billion at a share price of $92.50. This price is seen as favorable by some investors, given projected revenue of $3.8 billion for the next fiscal year.

Leading the funding round are Thrive Capital and returning investors Andreessen Horowitz, Insight Partners, along with Singapore's GIC sovereign wealth fund.

Alongside the equity raise, the company is also negotiating to secure $4.5 billion in debt financing, including a $2.5 billion term loan from direct lenders.

Founded in 2013, Databricks specializes in data analytics and AI, providing a cloud-based platform for enterprises to develop and manage data and AI applications.

Although Databricks and Thrive Capital declined to comment, this funding boost signifies a significant valuation increase for the 11-year-old company, which has yet to turn a profit and was valued at $43 billion in September. The funds will also be used to buy back restricted stock units from early employees and cover associated tax costs.

Databricks has thrived amid the AI boom, increasing sales of tools for clients to deploy AI applications using stored data. Its leading competitor, Snowflake, holds a market capitalization of about $56 billion with expected revenue of $3.4 billion for the fiscal year ending January 2025.

The strategy to raise substantial funding to address expiring employee stock options echoes a similar move by Stripe, which raised $6.5 billion last year at a valuation of $50 billion.

This trend of major funding rounds highlights the wealth present in the venture capital ecosystem and a robust interest in AI companies, allowing firms to maintain private status longer. This has led to unusually large funding rounds like OpenAI's $6.5 billion raise at a $165 billion valuation.

Despite expectations for a resurgence of IPOs in 2025, such moves suggest Databricks and other promising public market candidates are not hurried to go public.