Regardless of the product and idea they had, a company that is 15 years old and raised 10+ billion dollars still needing to raise money after all this time is ridiculous.
Not being sustainable after all this time and billions of dollars is a sign company is just burning money, and a lot of it. wework vibes.
quietthrow · 10m ago
This. To me if you are still unprofitable after 15 years you are not really a business.
However genuinely curious about the thesis applied by the VC’s/Funds that invest in such a late stage round? Is it simply they are taking a chance that they won’t be the last person holding the potato? Like they will get out in series L or M rounds or the company may IPO by then. Either ways they will make a small return? Or is the calculus diff?
VoidWhisperer · 5h ago
They were expecting to be cash flow positive in Jan 2025, according to [0]. That said, it is hard to tell if they actually became cash flow positive since with them still being a private company, they aren't required to release that information.
This! We did some simple testing on their platform to integrate it into our product for a customer. In a few days of light work rang up a huge bill. Many multiples of what we spend on OpenAI, which gets heavy use.
Them and Snowflake have been in an acquisition race, gobbling up data engineering startups like Pac-Man.
That costs a fair bit of dosh.
mackman · 1h ago
Is this just a case of waiting to stay private while still giving current employees some liquidity?
austhrow743 · 4h ago
Do we know that they need to raise and are not sustainable? I don't think them raising is evidence of either.
espadrine · 5h ago
At least it is not unprecedented. Palantir raised a series I in 2020 after 17 years of operation.
ktallett · 5h ago
It feels like they may have got market share using low costs and this has led to this situation.
blerb795 · 5h ago
The costs of using Databricks are anything but low, though.
ktallett · 3h ago
True, but it can still be lower than alternatives or lower than the cost to provide.
dahcryn · 10m ago
it really is the most expensive I've ever came across. It would be a flatout no-go if it weren't for Microsoft pushing everyone onto this platform, supported by their network of really absolutely neutral Gartner friends and Deloittes/KPMG/Accenture/TCS "experts" to recommend what lines their pockets.
ed_elliott_asc · 6h ago
I can’t help feeling it is the first major misstep from databricks , they are raising the money for their hosted Postgres and ai platform.
Ai is not far away from dropping to the “trough of disillusionment” and I can’t see why databricks even needs Postgres.
Hopefully I’m wrong as I’m a big fan of databricks.
benrutter · 5h ago
Definitely seem like bad investments from my perspective on databricks.
Databricks is great at offering a "distributed spark/kubernetes in a box" platform. But its AI integration is one of the least helpful I've experienced. It's very interuptive to a workflow, and very rarely offers genuinely useful help. Most users I've seen turn it off, something databricks must be aware of because they require admins permission for users to opt out of AI.
I don't mean to rant, there's lots that is useful in databricks, but it doesn't seem like this funding round is targeting any of that.
ed_elliott_asc · 5h ago
Yeah doesn’t seem like core functionality
bayindirh · 5h ago
Everybody wants a pie in that AI bubble, whether it sticks or not, and that's a bad thing for companies' long term vision.
It might come down like the dotcom bubble like fallout when this thing bursts.
alwahi · 2h ago
i don't think that it is possible to raise a 100 billion without name dropping ai in every sentence in every meeting you have with a potential investor....
quickthrowman · 1h ago
They are not raising $100B, they are raising money at a valuation of $100B.
TrackerFF · 6h ago
What’s the obvious rationale for going through the whole alphabet of funding rounds, instead of going public / IPO after «the usual» number of raising money.
Wouldn’t the current strategy result in some serious stock dilution for the early investors?
jillesvangurp · 5h ago
Investors put 10 billion in in a previous round; that's a lot. Somehow, more is needed now. 100M is just 1% of that. So it's not going to massively move the needle. But it does raise the question where all that cash is going.
My guess is that they might be about to embark on a shopping spree and acquire some more VC backed companies. They've actually bought quite a few companies already in the past few years. And they would need cash to buy more. The company itself seems healthy and generating revenue. So, it shouldn't strictly need a lot of extra capital. Acquisitions would be the exception. You can either do that via share swaps or cash. And of course cash would mostly go to the VCs backing the acquired companies. Which is an interesting way to liquidate investments. I would not be surprised to learn that there's a large overlap with the groups of VCs of those companies and those backing databricks. 100M$ on top of 10B sounds like somebody wants in on that action.
As a financial construction it's a bit shady of course. VCs are using money from big institutional investors to artificially inflate one of their companies so that it can create exits for some of their other investments via acquisitions financed with more investment. It creates a steady stream of "successes". But it sounds a bit like a pyramid game. At some point the big company will have to deliver some value. I assume the hope is some gigantic IPO here to offload the whole construction to the stock market.
austhrow743 · 4h ago
Where did you get the 100M figure from?
impulser_ · 6h ago
Because they don't want the public market to put a real valuation on the company, when they can still raise money with a made up valuation.
n2d4 · 6h ago
Stock dilution doesn't work like that. If a seed investor invests for 5% at a $10mil valuation, and the company goes 10x (ie. a valuation of $100mil), if the company now raises a $100mil Series K, that means the Series K investor owns 50% of the company, and the seed investor got diluted down to 2.5%. However, the new valuation of the company is now $200mil with the cash that the new investor brought in, effectively making the seed investor's investment worth the same.
It's a smaller piece of a bigger pie.
To answer your question, the right question to ask is why go public when you can remain private? Public means more paperwork, more legalese, more scrutiny, and less control for the founder, and all of that only to get a bit more liquidity for your stock. If you can remain private, there really isn't much of a reason to not do that.
dgoldstein0 · 6h ago
An IPO means selling a whole bunch of people, whereas fundraising rounds pre-IPO mean courting a small number of large investors. I think it's partly a sign of the times that there's enough concentrated capital that you can get enough money from private hands to not need to go the IPO route yet.
tormeh · 5h ago
The private market is getting out of hand, then. I think it makes sense for private companies beyond a certain size to have the same reporting requirements that listed ones do. At these valuations the private market for startups is becoming systemically important.
blerb795 · 5h ago
To some degree, they do -- under SEC rules (Exchange Act §12(g)), private companies with >$10M in assets and 2,000+ shareholders (or 500+ non-accredited investors) have to start public-style reporting.
I assume there's some clever accounting to ensure they're not at the 2,000 shareholder cap (perhaps double-trigger RSUs don't count as being a shareholder yet?)
helltone · 5h ago
This heavily depends on share classes and preferences. Surely the new investor wants better terms. The issue isn't so much dilution as a preference but added risk of never even getting a payout at all.
epolanski · 6h ago
> If you can remain private, there really isn't much of a reason to not do that.
With the exception of founders it's better for literally everybody else, more scrutiny, more pressure on c-corp, more liquidity, etc.
simonebrunozzi · 6h ago
A new round is easier than IPO. Especially when the IPO outcome is not necessarily positive.
jgalt212 · 6h ago
An order of magnitude less scrutiny, but also an order of magnitude in size of investor base. The private markets trade at Palantir levels so why go public. Also the private markets are now routinely doing secondary transactions so even less reason to go public.
echelon · 6h ago
If the private markets can offer you the liquidity you need on your terms, then why subject yourself to the scrutiny of the public markets?
Plus the markets are in a weird state right now.
Lionga · 6h ago
IPO needs real numbers, VCs just want buzzwords
thinkindie · 6h ago
I’ve never seen a Series K before. I wonder how their cap table looks like.
captn3m0 · 6h ago
In India, Zomato[0] (now listed) and Swiggy[1] both had a Series K. SpaceX has only gotten to a Series J, but they've done some secondary sales since. Apparently, Palantir[2] has had a Series K as well, back in 2015.
They’re not raising $100b. They’re raising _at_ $100b.
tzury · 20m ago
This curvature of spacetime is caused by the mass of the AI bubble.
While many comments were focused on the "K" letter, I wanted to remind us all that OpenAI stretched their Series E from Jan 23, 2023 to Nov 22, 2024
-- 23 months, squeezing in 6 rounds
If they’re not profitable by now watch Oracle just buy them in the future and that’ll be that.
namenotrequired · 5h ago
Why Databricks would do this (rather than IPO) is obvious. When you can raise privately, it’s way easier than IPO. The real question to me is why the investors (new and previous) are going along with it?
TuringNYC · 1h ago
Because it is a better valuation than what they would get in the public markets with an IPO?
xendo · 5h ago
Prediction for 2026 - investors will be shitting bricks.
uxcolumbo · 3h ago
Are there any cheaper alternatives to Databricks, EC2, DynamoDB, S3 solution? Where cost is more predictable and controlled?
What's a good roll your own solution? DB storage doesn't need to be dynamic like with DynamoDB. At max 1TB - maybe double in the future.
Could this be done on a mid size VPS (32GB RAM) hosting Apache Spark etc - or better to have a couple?
P.S. total beginner in this space, hence the (naive) question.
dahcryn · 5m ago
I don't think there is anything out there that really bundles everything exactly like databricks does.
There are better storage solutions, better compute and better AI/ML platforms, but once you start with databricks, you dig yourself a hole because the replacing it is hard because it has such a specific subset of features across multiple domains.
In our multinational environment, we have a few companies that are on different tech stacks (result of M&A). I can say Snowflake can do a lot of the things Databricks does, but not everything. Teradata is also great and somehow not gaining a lot of traction. But they are near impossible to get into as a startup, which does not attract new talent to give it a go.
On the ML side, Dataiku and Datarobot are great.
Tools like Talend, snaplogic, fivetran are also really good at replacing parts of databricks.
So you see, there are better alternatives for sure, cheaper at the same time too, but there is no drop-in replacement I can think of
AJRF · 1h ago
Depends on how you define cheaper - you could set up Apache Iceberg, Spark, MLFlow, AirFlow, JupyterLab, etc and create an abomination that sort of looks like Databricks if you squint, but then you have to deal with set up, maintenance, support, etc.
Computationally speaking - again depends on what your company does - Collect a lot of data? You need a lot of storage.
Train ML Models, you will need GPUs - and you need to think about how to utilise those GPUs.
Or...you could pay databricks, log in and start working.
I worked at a company who tried to roll their own, and they wasted about a year to do it, and it was flaky as hell and fell apart. Self hosting makes sense if you have the people to manage it, but the vast majority of medium sized companies will have engineers who think they can manage this, try it, fail and move on to another company.
hobs · 52m ago
Don't worry, most places go straight with databricks and get a flaky as hell system that falls apart anyway, but then they can blame databricks instead of their own incompetence.
dahcryn · 4m ago
yeah where IT blocks half of the config, and you disable half of the features that could make it great, just to make sure they definitely don't give control to..GASP... A DATA ENGINEER
jinjin2 · 1h ago
Exasol costs us a fraction of what we used to pay for Databricks, and that is even with us serving far more users than we used to do (from a data size perspective we are not at the petabytes scale yet, but getting there).
mjaques · 1h ago
Self host on Hetzner, it will save you time, money and troubles.
nikolayasdf123 · 6h ago
> Series K
I never seen such invertment round. aren't you supposed to stop at C or D? .. or at least at some point?
geodel · 8m ago
Yes, they need to stop at Z.
nikolayasdf123 · 5m ago
tripple AAA
thrown-0825 · 6h ago
lol analytics platform that no one outside the industry has heard of valued at $100B.
just keep rolling out those fundraising rounds and kick the can down the road.
_dark_matter_ · 5h ago
I'm as skeptical as anyone, but have you ever heard of companies like Oracle, which got rich off a database or Snowflake (current market cap 65B)? Companies pay oodles of money for that capabilities.
thrown-0825 · 2h ago
oracle succeeded because of its lobbyists and sales contacts, so much so that they spun out into another multi billion $ org
ed_elliott_asc · 5h ago
I’d imagine pretty much all of the s and p 500 companies rely on databricks, a large percentage of them at least
thrown-0825 · 2h ago
for what? managed postgres and some ml training tools?
dahcryn · 2m ago
because it's recommended by nearly all consultants and Microsoft.
Simple as that, it's consulting Heaven. Much like SAS and SAP. Everybody happy.
Now to be far to databricks, if used properly and ignore the cost, it does actually function pretty well. Compared to Synapse, PowerBI Tabular, Fabric, Azure ML, ... that's already a big big big step forward.
esafak · 52m ago
Spark
rmonvfer · 5h ago
If they run out of letters, will they eventually raise a series AA?
hvb2 · 5h ago
Imagine the funding they get 10 years later when they finally do a AAA round.
/s
nikolayasdf123 · 6h ago
wonder what they employees think. will they ever IPO and cashout?
hiyer · 23m ago
I've heard they're regularly doing buybacks for employees.
tormeh · 5h ago
If their options haven't converted to stock yet, it's not looking good. This is the sort of shenanigans that demand a strike. And ideally regulation.
throwawaydbb · 5h ago
Since this year the employees are vesting RSUs (not options, and also no expiry date) quorterly now, they sell a portion of them (automatically) and pay taxes to the government at each vesting event, as the expiry date no longer exists. For liquidity there are tenders where employees sell their stock privately, so the employees no longer need IPO to cash out.
Just to clarify - for many years employees were getting the RSUs not options, just with the expiratation date attached - which is gone since this year.
TuringNYC · 1h ago
So what happened to employees who had RSUs with expirations that have passed? Do they lose the value? I know my startup stock had 10yr expirations.
throwawaydbb · 2m ago
It didn’t happen as they were careful to make a tender before expiration hit anyone.
flarg · 5h ago
Options can a significant portion of sign on bonus but they typically vest over several years so I guess they are hoping for an IPO eventually. IMHO Databricks will be overtaken by "events" including AI disillusionment, broader open source tools and broader education across the workforce. So the eventual IPO will not happen.
tormeh · 5h ago
Depends. Some options only vest in the case of an "exit event", i.e. an acquisition or an IPO. At this point I would assume such options are borderline worthless.
IshKebab · 5h ago
Yeah I think this is how it usually works, and yeah at $100bn valuation they are now 100% worthless, because investors get paid first, and there's no way they'll get sold or IPO for more than $100bn.
TuringNYC · 1h ago
> Yeah I think this is how it usually works, and yeah at $100bn valuation they are now 100% worthless, because investors get paid first, and there's no way they'll get sold or IPO for more than $100bn.
Not quite right? Because the raise-implied valuation doesnt account for preferences. The IPO could be for 50bn and the latest investors could do well given the preference stack of first money outs in later rounds.
alwahi · 2h ago
for laypeople this is like the, "what does salesforce even do" meme, but the explanation is a million times more ridiculous....
dude250711 · 5h ago
It will be a nice discount acquihire for Microsoft in a few years.
retinaros · 6h ago
I always struggled to understand how do you make a company adopt a platform like databricks to « manage data » isnt managing data a minefield with plenty of open source pieces of software that serve different purposes ? who is the typical databricks customer?
benrutter · 5h ago
I think that's the main offering of databricks- you get a "data platforn in a box" and navigating the forest of piecemeal solutions is replaced with telling your data science and analytics teams to "use databricks".
It's easy to look on knowing lots about data tools and say "this could be better done with open source tools for a fraction of the cost", but if you're not a big tech company, hiring a team to manage your data platform for 5 analysts is probably a lot more expensive than just buying databricks.
georgemcbay · 6h ago
Pull out the Prince albums, its time to party like its 1999.
Not being sustainable after all this time and billions of dollars is a sign company is just burning money, and a lot of it. wework vibes.
However genuinely curious about the thesis applied by the VC’s/Funds that invest in such a late stage round? Is it simply they are taking a chance that they won’t be the last person holding the potato? Like they will get out in series L or M rounds or the company may IPO by then. Either ways they will make a small return? Or is the calculus diff?
[0]: https://www.databricks.com/company/newsroom/press-releases/d...
OpenAI is still early, burning VC money to acquire customers by operating at a loss. This makes it appear cheap.
DataBricks is further along, attempting to claw back the value they provided to customers by raising prices.
That costs a fair bit of dosh.
Ai is not far away from dropping to the “trough of disillusionment” and I can’t see why databricks even needs Postgres.
Hopefully I’m wrong as I’m a big fan of databricks.
Databricks is great at offering a "distributed spark/kubernetes in a box" platform. But its AI integration is one of the least helpful I've experienced. It's very interuptive to a workflow, and very rarely offers genuinely useful help. Most users I've seen turn it off, something databricks must be aware of because they require admins permission for users to opt out of AI.
I don't mean to rant, there's lots that is useful in databricks, but it doesn't seem like this funding round is targeting any of that.
It might come down like the dotcom bubble like fallout when this thing bursts.
Wouldn’t the current strategy result in some serious stock dilution for the early investors?
My guess is that they might be about to embark on a shopping spree and acquire some more VC backed companies. They've actually bought quite a few companies already in the past few years. And they would need cash to buy more. The company itself seems healthy and generating revenue. So, it shouldn't strictly need a lot of extra capital. Acquisitions would be the exception. You can either do that via share swaps or cash. And of course cash would mostly go to the VCs backing the acquired companies. Which is an interesting way to liquidate investments. I would not be surprised to learn that there's a large overlap with the groups of VCs of those companies and those backing databricks. 100M$ on top of 10B sounds like somebody wants in on that action.
As a financial construction it's a bit shady of course. VCs are using money from big institutional investors to artificially inflate one of their companies so that it can create exits for some of their other investments via acquisitions financed with more investment. It creates a steady stream of "successes". But it sounds a bit like a pyramid game. At some point the big company will have to deliver some value. I assume the hope is some gigantic IPO here to offload the whole construction to the stock market.
It's a smaller piece of a bigger pie.
To answer your question, the right question to ask is why go public when you can remain private? Public means more paperwork, more legalese, more scrutiny, and less control for the founder, and all of that only to get a bit more liquidity for your stock. If you can remain private, there really isn't much of a reason to not do that.
With the exception of founders it's better for literally everybody else, more scrutiny, more pressure on c-corp, more liquidity, etc.
Plus the markets are in a weird state right now.
[0]: https://appedus.com/indias-zomato-raised-500-million-in-seri...
[1]: https://techcrunch.com/2022/01/24/indian-food-delivery-giant...
[2]: https://www.finsmes.com/2015/12/palantir-technologies-raises...
Rust + Cloud Object Store/serverless/S3 + Postgres. Slap "AI agents" on top: keyword peak reached. So they will easily raise the 100bn.
Meanwhile, this is Lakebase/Neon: https://blog.opensecret.cloud/why-we-migrated-from-neon-to-p...
Due diligence? Taboo.
While many comments were focused on the "K" letter, I wanted to remind us all that OpenAI stretched their Series E from Jan 23, 2023 to Nov 22, 2024 -- 23 months, squeezing in 6 rounds
source: https://tracxn.com/d/companies/openai/__kElhSG7uVGeFk1i71Co9...
What's a good roll your own solution? DB storage doesn't need to be dynamic like with DynamoDB. At max 1TB - maybe double in the future.
Could this be done on a mid size VPS (32GB RAM) hosting Apache Spark etc - or better to have a couple?
P.S. total beginner in this space, hence the (naive) question.
There are better storage solutions, better compute and better AI/ML platforms, but once you start with databricks, you dig yourself a hole because the replacing it is hard because it has such a specific subset of features across multiple domains.
In our multinational environment, we have a few companies that are on different tech stacks (result of M&A). I can say Snowflake can do a lot of the things Databricks does, but not everything. Teradata is also great and somehow not gaining a lot of traction. But they are near impossible to get into as a startup, which does not attract new talent to give it a go.
On the ML side, Dataiku and Datarobot are great.
Tools like Talend, snaplogic, fivetran are also really good at replacing parts of databricks.
So you see, there are better alternatives for sure, cheaper at the same time too, but there is no drop-in replacement I can think of
Computationally speaking - again depends on what your company does - Collect a lot of data? You need a lot of storage.
Train ML Models, you will need GPUs - and you need to think about how to utilise those GPUs.
Or...you could pay databricks, log in and start working.
I worked at a company who tried to roll their own, and they wasted about a year to do it, and it was flaky as hell and fell apart. Self hosting makes sense if you have the people to manage it, but the vast majority of medium sized companies will have engineers who think they can manage this, try it, fail and move on to another company.
I never seen such invertment round. aren't you supposed to stop at C or D? .. or at least at some point?
just keep rolling out those fundraising rounds and kick the can down the road.
Simple as that, it's consulting Heaven. Much like SAS and SAP. Everybody happy. Now to be far to databricks, if used properly and ignore the cost, it does actually function pretty well. Compared to Synapse, PowerBI Tabular, Fabric, Azure ML, ... that's already a big big big step forward.
/s
Just to clarify - for many years employees were getting the RSUs not options, just with the expiratation date attached - which is gone since this year.
Not quite right? Because the raise-implied valuation doesnt account for preferences. The IPO could be for 50bn and the latest investors could do well given the preference stack of first money outs in later rounds.
It's easy to look on knowing lots about data tools and say "this could be better done with open source tools for a fraction of the cost", but if you're not a big tech company, hiring a team to manage your data platform for 5 analysts is probably a lot more expensive than just buying databricks.
Mega lmao. They already owe $20B.
Their revenue is good, though, further adding to the mistery.