Databricks recently closed a funding round in which it raised $10 billion in fresh capital. This led to speculation about an IPO for the company, but Databricks CEO Ali Ghodsi says this will not happen anytime soon.
“This year was an election year. We wanted some stability – people are worried about interest rates, inflation… So we said, look, it’s silly to go public this year, so we’re definitely going to wait.” Ghodsi reported this at an event earlier this week. TechCrunch writes. “The earliest theoretical possibility for an IPO would be next year, and then you also have lock-up periods. It would simply take too long for employees to get liquidity.”
Databricks is using this “Series J” funding round to cash out early employees and continue to grow. Although 2024 was uncertain in many ways, the IPOs of companies such as ServiceTitan and Reddit have been largely successful.
Strong interest
According to Ghodsi, the company began with the intention of raising $3 billion to $4 billion in this round, but media reports about their fundraising efforts drove up interest tremendously. “I saw an Excel sheet where they kept track of all the interested parties. It showed $19 billion in interest, and I almost fell off my chair,” Ghodsi said. “And we hadn’t even talked to everyone yet. I thought, ‘Oh my God, that’s a huge amount.’ So then we actually moved the price up.”
Despite the impressive fundraising, Ghodsi is not ruling out an IPO for Databricks in 2025. However, he indicated that it could also be 2026. He said going public is much less important today than 10 to 15 years ago, as this record-breaking funding round demonstrates. But it’s still something the company wants to do. That said, Ghodsi is trying not to schedule an IPO before the “AI bubble,” as he called it, bursts.
“I mean, we are in the middle of the peak of the AI bubble. It doesn’t take a genius to understand that a company with five people with no product, no innovation, no intellectual property – just recent graduates – is not worth hundreds of millions, sometimes billions,” Ghodsi said. “You see billion-dollar valuations in startups that have nothing – that’s a bubble.”
Battle with Snowflake already won
The Databricks CEO did not clarify which startups he was talking about, but we have certainly seen a lot of AI unicorns this year. Yet none of this seems to worry Ghodsi. He says his company and its valuation can stand the test of time. He thinks his company has already won its first major battle with another data analytics startup; Snowflake.
“We had a program called ‘SnowMelt,'” Ghodsi said, confirming reports of an initiative within Databricks to take customers away from Snowflake. “We went after Snowflake and demonized them, but that’s behind us.”
That attempt to demonize Snowflake came with a hefty price tag: Databricks reportedly paid $2 billion to acquire a small startup called Tabular. Snowflake also reportedly tried to buy Tabular, even though that company had only $1 million in annual recurring revenue at the time.
Now, Databricks is chasing larger competitors with products that rival giants such as Salesforce and Microsoft. Ghodsi says data and AI will play a slightly more important role in people’s lives every year, and he thinks his company is well-positioned to fill that niche.