Databricks, the data, and AI company, a startup secured $1.6 billion in Series H funding at a valuation of $38 billion. This investment is at close heels when Databricks raised another $1 billion just a couple of months ago. Let us find out more about the deal in the write-up.
Databricks funding deal in brief
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Databricks founders are the developers of Delta lake, Apache Spark, and MLflow. These are the 3 open-source projects that are the main machine learning components that are running on big data sources. Lakehouse, the main cloud service of Databricks makes use of the three mentioned above. By doing so, Lakehouse can bring various sources of data together and allow analysts and data scientists to operate from a single platform as far as running workloads is concerned.
At the new valuation, Databricks is worth 63 times its present ARR. Counterpoint Global, which is a Morgan Stanley fund led the Series H. Baillie Gifford, ClearBridge, and UC Investments were the other investors. The new funding brings Databrick’s total private funding to $3.5 billion. This raise comes approximately seven months following the raising of $1 billion on a valuation of $28 billion.
Databricks has attained the $600 million ARR or (Annual Recurring Revenue) milestone. This was disclosed as part of the Databrick funding announcement. In 2020 it closed at $425 million annual recurring revenue essentially a manifestation of how rapidly it is growing. As per the company, the new annual recurring revenue represents 75$ growth when measured YoY basis.
This is a quick growth for a company especially of this size reported as per the Bessemer Cloud Index. Also, the so-called top quartile public organizations, the software companies in particular’s growth is registered at 44% Y-O-Y (Year Over Year). These companies have value worth 22 times the forward revenues.
Despite the rate at which the company is growing, it has not gone public. The founders of the company are enjoying the attention. Now he has got access to unbounded capital. Databricks was supposed to go ahead with another $100 million that was set to close at $1.5 billion. No investor interest is lacking, which permits its CEO to get on board such shareholders that he will require for the post IPO period of the company.
It also allows him to invest in some smaller firms so that the holes or pitfalls in Databrick’s roadmap and embrace growth from the point of view of capital advantage.
However, not going public for a very long time may be risky for the growing company. If you devalue the bigger market for software companies, it is quite likely that Databricks will find it difficult and expensive to go public when it is time for final valuation. However, this may be a far cry given the fact that the markets are bullish for the software shares and the potential Databricks has.
However, one of the Databrick founders did rule out the possibility of going public by merging with a blank check company or for that matter through SPAC or a special purpose acquisition company. It may be mentioned here that many startups do take this route of going public, the special purpose acquisition being one of the commonest.