Databricks’ recent $10 billion funding round, valued at $62 billion, has sparked concerns among venture capitalists about the viability of the company’s valuation. The deal comes as the company is growing rapidly, with year-over-year growth exceeding 60% and a revenue run rate of over $3 billion.
However, some experts caution that this valuation may be too optimistic, given the current state of the AI market. CEO Ali Ghodsi has described the AI landscape as a “peak bubble,” suggesting that this round could look expensive in hindsight.
Furthermore, employees are selling their shares at a discount, with most of the funding allocated towards non-dilutive tenders, raising questions about whether they should have sold at a higher price had Databricks gone public earlier.
The deal has also raised eyebrows among investors, who question the high fees charged by certain partygoers in the investment round. This raises concerns that the deal was more of a “party round” than a traditional venture capital investment.
Despite these concerns, Ghodsi assures that Databricks will eventually go public, possibly as early as next year. When that happens, investors will have to determine whether this week’s VC math added up.
Source: https://www.axios.com/2024/12/18/digging-into-databricks-bargain