By Krystal Hu, Kenrick Cai and Echo Wang
(Reuters) – Software company Databricks is nearing a deal that could become one of the largest venture capital financing rounds in history as investors have shown strong interest in owning a piece of the fast-growing data analytics company, three sources said on Friday.
The round, which is nearly twice oversubscribed, could exceed $9.5 billion when it closes next week, exceeding the company’s initial target and higher than what was previously discussed, the sources told Reuters, citing warned that the final number could still rise.
The San Francisco-based company, which helps companies process and analyze their data, is expected to fetch a valuation of more than $60 billion at a price of $92.50 per share. That price is considered a bargain in the eyes of some investors, given that the company’s expected revenue for the next fiscal year is $3.8 billion, said the sources, who requested anonymity to discuss private matters.
Thrive Capital and returning investors Andreessen Horowitz, Insight Partners and Singaporean sovereign wealth fund GIC are expected to lead this mega round, one of the sources said.
In conjunction with the capital raise, the company is also in talks to raise $4.5 billion in debt financing, including a $2.5 billion term loan from direct lenders, one of the sources said. Bloomberg first reported on the increase in private debt.
Founded in 2013, Databricks is a data analytics and artificial intelligence company. It provides a cloud-based platform that allows companies to build and manage data and AI applications.
Databricks and Thrive Capital declined to comment. Insight, Andreessen Horowitz and GIC did not immediately respond to a request for comment.
This high-profile round would mark a jump in valuation for the 11-year-old company that has yet to turn a profit. The company was valued at $43 billion in September. The move would also be a big win for early employees, as the company plans to spend the financing on buying back expiring restricted stock units from early employees and covering related tax costs. As part of the deal, the company plans to issue preferred shares to investors participating in the round, the sources said.
Databricks has capitalized on the AI boom by selling more tools that allow customers to build and deploy AI applications using the growing amount of data they already store with the company. It competes with Snowflake, which has a market cap of about $56 billion with expected revenue of $3.4 billion in the fiscal year ending January 2025.
The move to raise excessive funding specifically to address the expiring issue of employee stock options, rather than adding to its balance sheet, mirrors a move by payments company Stripe, which raised $6.5 billion last year at a valuation of 50 billion dollars.
Such mega deals highlight the amount of money available in the venture capital system and the appetite for top names. Investors are doubling down on AI companies and supporting companies to stay private longer, enabling rarely seen round sizes like OpenAI’s $6.5 billion raise at a $165 billion valuation and its $6 billion raise by xAI.
The move signals that Databricks and other top public market contenders are in no rush to go public, despite expectations of a resurgence in venture capital-backed IPOs in 2025.
(Reporting by Krystal Hu in Toronto, Kenrick Cai in Vancouver and Echo Wang in New York; Editing by Matthew Lewis)
