Databricks is a leading data lake provider that just announced over $500 million in new funding, reaching a valuation of $43 billion. Key investors include NVIDIA, marking growing strategic partnerships between AI infrastructure startups and chipmakers. Over the past 5 years, Databricks has raised $800 million from leading VC firms, while growing revenue 50% annually amid macro uncertainty. Its CEO highlights efficient operations, such as halving its $30 million SaaS budget, as key for stability. With wide adoption by Fortune 1000 companies and synergies with NVIDIA graphics chips, Databricks remains bullish on the long-term need for AI software despite economic volatility.
Databricks raises $500 million at $43 billion valuation, seeing stability despite VC pullback
Databricks was founded in 2013 and is a leading data lake provider headquartered in San Francisco. It last raised funds in 2021 during a hot market, reaching a $38 billion valuation. Since then, valuations for cloud software stocks crashed 45% amid macro uncertainty, including for rivals like Snowflake. However, Databricks has shown resilience, maintaining its valuation despite wider pullbacks in growth tech IPO pipeline. This round was raised at $73.50 per share, similar to 2021 levels, with the added $5 billion value mostly coming from equity allocated to employees and investors over the past two years as the firm grew from 3,500 to 6,000 staff.
NVIDIA joins funding round as chipmakers cozy up to AI infrastructure startups
Notably, NVIDIA also participated in this latest Databricks funding round. The chipmaking giant has been injecting capital into various AI infrastructure startups recently, including Hugging Face, Cohere and CoreWeave. Databricks CEO Ali Ghodsi started talks with NVIDIA CEO Jensen Huang “not too long ago”. As both firms deepen involvement in AI, strategic partnerships become increasingly important. Databricks spends heavily on NVIDIA GPUs in the cloud, and even more so after acquiring MosaicML for $1.3 billion – another NVIDIA partner – to efficiently run large language models.
Long-term software demand outweighs volatility as AI permeates business
Despite cutting its tech budget during the downturn, Databricks grew revenue 50% in the quarter ending July 2022, reaching $1.5 billion annualized revenue. This comes as rival Snowflake, which IPO’ed in 2020, reported 36% sales growth last quarter to $674 million. Databricks has maintained steady growth without layoffs or cash burn issues faced by other unicorns. Its CEO reiterated plans for an IPO without giving specifics on timing. Investor T. Rowe Price, also a top Snowflake customer, reiterated its bullishness on AI software by leading this new $500 million raise.
Databricks operational efficiency critical to navigate uncertainty
Unlike other unicorns, Databricks focuses on software subscriptions rather than cash burn for growth. For example, it previously spent $30 million on 300 SaaS tools before optimizing to cut that budget in half. Together with wide Fortune 1000 adoption and synergies with NVIDIA’s AI hardware, prudent operations reinforce Databricks’ stability despite marketchaos. This has helped it continue robust hiring and avoid large layoffs plaguing the tech sector.
In conclusion, Databricks recently raised $500M from investors including new backer NVIDIA, reaching a $43B valuation amid tech market volatility. Strong top line growth, Fortune 1000 customer adoption, synergies with NVIDIA’s AI chips, and prudent operations sustain Databricks’ resilience despite uncertainty facing other unicorns and growth tech IPOs.