In a landmark deal that underscores the intensifying battle for artificial intelligence dominance, Databricks has secured £10bn in venture capital funding, marking the largest US venture deal of 2023. The data analytics and AI company’s valuation has soared to £62bn, reflecting the robust confidence of major technology investors in its growth trajectory.
The funding round attracted prestigious investors including Thrive Capital, Andreessen Horowitz, Insight Partners, and Iconiq Growth. Thrive Capital, led by Josh Kushner, contributed a substantial £1bn to the round, demonstrating their conviction in Databricks’ potential to evolve into a trillion-pound infrastructure powerhouse.
Ali Ghodsi, co-founder and chief executive of Databricks, emphasised the strategic importance of this capital injection in the context of an unprecedented talent war in AI. “The talent war for AI is like no other time before. Already it was pretty insane levels of compensation for software engineers in Silicon Valley, and it’s gone up from there,” Ghodsi explained.
The majority of the raised capital will be allocated to addressing employee stock option matters, enabling staff to cash out their lucrative options and manage associated tax obligations. This approach mirrors similar strategies employed by other private technology companies, such as Stripe’s £6.5bn raise last year.
Databricks’ impressive growth trajectory is evident in its projected annualised revenue of £3bn by early 2024, coupled with expectations of positive free cash flow. The company’s valuation has experienced a significant uplift from £43bn in September 2023, reflecting strong market confidence in its business model and growth potential.
While speculation about a potential public offering circulates, Ghodsi maintains that the company now has increased flexibility regarding its timeline, stating that the “absolute earliest we would go public is next year.” This substantial funding round positions Databricks strongly in the competitive AI landscape, particularly against rivals such as OpenAI and Anthropic.
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