San Francisco-based Databricks is set to see its valuation soar by 61% to over $100 billion following a new funding round, highlighting strong investor interest in artificial intelligence startups.
The company has signed a term sheet for a Series K round, though the amount being raised was not disclosed, according to Reuters.
Databricks, which raised $10 billion last year, plans to use the new funds for product development and mergers and acquisitions in the AI sector. This reflects a growing trend where corporations and governments are eager to harness the efficiencies offered by rapidly evolving AI technologies.
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Databricks Sets A New Valuation Benchmark
Derek Hernandez, a senior research analyst at PitchBook, noted that the high valuation indicates a concentration of late-stage capital in market-leading companies within foundational technology sectors. Databricks serves around 15,000 customers, including major companies such as Block, Shell, and Rivian, according to Reuters.
Databricks competes with listed companies such as Snowflake Inc. (NYSE:SNOW), which has a market cap of about $66 billion. The firm employs approximately 8,000 people globally.
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Is AI Investment The Future Of Tech?
Hernandez pointed out that investors are banking on a large total addressable market that can sustain multiple high-value companies, with Databricks expected to maintain a durable competitive edge. Startups such as Databricks are opting to stay private longer, given the higher interest rates and unpredictable appetite for IPOs.
Chris Lawrence, founder of Labyrinth Capital Partners, explained that what used to be pre-IPO rounds now often extend to Series G or later, with capital functioning like public equity but without the public oversight.
How Late-Stage Funding Is Shaping Startups
Private market investors are sitting on record levels of dry powder, allowing for larger late-stage funding rounds. This trend underscores a shift in how startups are capitalized, with significant implications for their growth trajectories and market strategies.
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