Databricks Soars: Secures $500M at $43B Valuation with Nvidia and Capital One Backing

0:00So in a move that really defies current trends in startup valuations, Databricks, which is a frontrunner in data analytics and artificial intelligence software, recently closed their Series X. funding round amassing over 500 million dollars like i said their valuations now at 43 billion the funding round is notable especially as a lot of other late stage startups like i was mentioning have seen their valuations slashed due to a funding slowdown so um this doesn't seem to apply to databricks the last company or the last time the company had its um it did like a round of funding i think was actually back in august of 2021 it got 1.6 billion dollars and it had a valuation of 38 billion.

0:39So now it's up to 43 billion. I'm assuming like their valuation actually went down from 38 billion after that round because they did that in 2021. So they probably tanked a little bit. Then they've done a lot of really good, a lot of good plays and bumped the valuation up and now we're able to raise at an increased valuation. So big kudos to them on getting over that valuation slump that most companies have been stuck in. The additional 5 billion really kind of tacked into the latest valuation indicates that not all of the you know ships out there are sinking with the tide so the investor lineup for this series i round they just did was a bunch of kind of like pre-ipo and strategic funding they had t-row price morgan stanley fidelity franklin templeton among a bunch of the investors that were kind of filling the pre-ipo quota and this i think is suggesting an anticipated transaction to the public market they're raising a ton of money their valuation is going up a lot.

1:33Once you get into the 40 billions, you're getting pretty dang close to an IPO. I think Instacart, their valuation recently kind of tanked, but they're looking at doing something like 27 billion if the numbers I was seeing recently are accurate. So, you know, you can say like that is like a definitely like a household name and Databricks is not, but Databricks will be quite a big player in the space. And so I think this is going to be really interesting to see see where this goes exactly one other thing i will say is that on the strategic end they had capital one ventures and nvidia that also put some money into this round so it looks like they're also grabbing some really solid you know strategic partners i think the partnership with nvidia is definitely not a surprise databricks has kind of been doubling down on its ai capabilities contemplating its traditional strength and data and machine learning software and nvidia concurrently is witnessing right heightened demand for its ai driven chips and software so much that you know countries are reportedly working to secure chip supplies for their own economic interest it's like an economic interest thing you're seeing like the u.s block certain chips from nvidia from not being able to go to china and other places because it's like a you know it's like a national security thing so in addition to all of these new investors um i think you also had private investment firms like andres and horwitz and tiger tiger global also participated in the Series I funding.

2:55So really, they had all the big players in the space. You know, how has Databricks managed to kind of secure a quote unquote upround in the landscape, which is full of, you know, investment strategies and like people that are a lot more conservative, looking for more conservative revenue multiples. So according to the company, its revenue run rate for the quarter ending in July 31st exceeded 1.3 or 1.5 billion. And it also has a global customer base exceeding 10 ,000 with 300 of those clients contributing at least a million dollars in annual revenue for its software and services, right? So they have over 300 clients paying at least a million dollars in annual revenue, right?

3:38$300 million, boom, right there. They have 10 ,000 clients. These guys are printing money right now. So while some earlier data hinted at slowing revenue growth, Databricks contends that its fiscal second quarter saw the, quote, strongest quarterly incremental revenue growth, end quote, in its history. So such performance, I think, is making investors really bullish about the company's potential to surpass even its current lofty valuation once it goes public, right? So this, the kind of this valuation is in the end of, I think, where we're going to see Databricks rise. I think post IPO, all things remaining, Databricks is going to see some solid growth into the future.

4:16So however, I don't think this means that Databricks is in a rush to make an IPO. Given its effective revenue multiple of 29x, the company's pricing seems slightly high for the current market. And I think that this implies a strategy of continued growth to justify its current valuation once it hits the public market, which is kind of signaling a deferred IPO. So I think the new influx of capital seems less like a lifeline and more like an enabler for Databricks, which is hardly scraping the bottom of its cash reserves. It has a ton of cash. It's making a ton of cash. And I think the additional funding may very well offer the company the kind of the latitude for other strategic maneuvers.

4:55It has this massive AI market. And I think the fresh half a billion dollars is going to serve as a significant booster for Databricks's kind of competitive ambitions. And this is also actually after I've recently seen a report saying that almost 50 % of CEOs said that AI was one of their biggest spending expenses that they're forecasting for in the future. And so I think that Databricks is going to get a ton of that cash, and we're going to see this company continue to climb in the future.