Databricks’ $10B Deal: Insight VC’s Insight and CEO’s Ignored Advice | TechCrunch
Investors have been on a rollercoaster ride this week as they jostled for a piece of Databricks’ groundbreaking $10 billion fundraising. George Mathew, managing director at Insight Partners, shared details of the deal with TechCrunch, shedding light on the intense negotiations that took place late into the night.
Insight Partners, along with new investor Thrive, led the deal that involved six firms, with all but Thrive being existing investors. Mathew expressed his satisfaction at securing a co-lead position despite already having invested in Databricks back in 2021. To participate in this massive fundraising, Insight had to tap into the Insight Partners Public Equities fund, managed by John Wolff.
The demand for a stake in Databricks was so high that the valuation skyrocketed in a matter of days. Starting at around $8 billion in mid-November, the deal quickly surged to $9.5 billion before closing at a whopping $10 billion with a valuation of $62 billion. This surpasses OpenAI’s previous record of a $6.6 billion raise in October, making it the largest venture round ever.
An interesting twist in Databricks’ journey is how it defied the odds to become a success story. Founded in 2013, the company risked becoming irrelevant with the shift towards cloud-based data processing. However, Databricks pivoted by launching Databricks SQL, a data warehouse product that positioned itself as a strong competitor to Snowflake.
CEO Ali Ghodsi’s decision to ignore advice from Mathew, who initially dismissed the idea of entering the data warehousing market, proved to be a game-changer. Ghodsi’s vision and persistence paid off, leading Databricks to a projected $3 billion revenue run rate by the end of its fiscal fourth quarter.
As the IPO market remains uncertain and investors clamor for AI infrastructure products, Databricks’ success story serves as a beacon of hope in the tech industry. With its innovative solutions catering to the growing demand for high-quality enterprise data, Databricks continues to redefine the landscape of data analytics and machine learning.
The journey of Databricks showcases the importance of resilience, vision, and strategic decision-making in navigating the ever-evolving tech landscape. As we witness the company’s meteoric rise, one thing is clear – in the world of tech, adaptability and innovation are key to staying ahead of the curve.
