Databricks raises $500 million Series I at a $43 billion valuation

Background

Databricks announced the round on 14 September 2023 ^[1]. It came about two months after the company closed its roughly $1.3 billion acquisition of MosaicML ^[2]. The two events are usually read together: a company that had just committed a large sum to an acquisition went back to investors for fresh capital.

The round

The company announced its Series I funding, raising more than $500 million at a $43 billion valuation ^[1]. The round established the price per share at $73.50 ^[1].

Valuation and amount raised measure different things. The valuation is the price the market puts on the whole company; the amount raised is how much new money comes in. Here the new money is small next to the valuation, so only a thin slice of the company changed hands. In a round of this shape the main product is a price — a number that employees, earlier backers and future investors can all point to — plus a set of new names on the shareholder list.

Who invested

The round was led by funds and accounts advised by T. Rowe Price Associates ^[1]. A lead investor is normally the party that negotiates the terms and sets the price, with others following.

Four new investors joined: Capital One Ventures, Ghisallo Capital Management, Ontario Teachers' Pension Plan and NVIDIA ^[1]. They are different kinds of money — a corporate venture arm, an investment firm, a pension plan and a technology company — a mix that is common in large late rounds, where a relationship can matter as much as the cheque.

A long list of existing investors took part again: Andreessen Horowitz, Baillie Gifford, ClearBridge, Counterpoint Global (Morgan Stanley), Fidelity, Franklin Templeton, GIC, Octahedron Capital and Tiger Global ^[1]. Repeat participation keeps the shareholder base stable; new names arriving alongside the old ones is the combination such a round usually aims for.

The figures Databricks disclosed

Alongside the round, Databricks said it had crossed a $1.5 billion revenue run-rate, with growth of more than 50% year over year and more than 10,000 customers ^[1].

A run-rate is not money already booked. It takes the revenue of a recent period and scales it to a full year, so it measures current speed rather than receipts. It is the number investors reach for when a company grows fast enough that the last full year already looks out of date. Paired with growth of over 50%, it says the business was adding revenue quickly while already operating at scale.

The three numbers answer the questions a private investor asks: how big (run-rate), how fast (growth), how broad (customers) ^[1].

The name

Venture rounds are conventionally lettered in order — Series A, B, C and so on. A Series I therefore sits a long way down that sequence, which is why rounds this late tend to be about price and backers rather than about whether the company will survive.

What it records

For the archive, the round is a dated snapshot: on 14 September 2023 the price of Databricks shares was $73.50, the company was valued at $43 billion, it had just spent about $1.3 billion on MosaicML, and it reported a run-rate above $1.5 billion with growth above 50% and more than 10,000 customers ^[1][2]. That is the set of numbers any later round, secondary sale or listing would be compared against.