There’s a certain interesting game that late-stage startups have to play when raising capital these days. They often have to sell more stock than they would like or risk angering some of their existing venture capital firms.
This scenario was recently played out at AI big data company Databricks, co-founder and CEO Ali Ghodsi (pictured above) told TechCrunch about its latest $5 billion raise announced Thursday.
“We wanted to raise $1 billion, and then The Information published an article about Databricks raising big money. They did it during our conference. We were so wrapped up in the conference that we weren’t really focused on raising money at all,” Godici recalled of the June conference.
“As soon as that article came out, there was a long line of investors and they started calling. My phone broke. I was busy with a conference, so it seemed like the worst possible timing,” he said.
It was an unenviable problem that turned reporting into a self-fulfilling prophecy.
“The level of interest was just insane. There was $15 billion of interest just from this select group of investors that we looked at,” he said.
Saying “no” to some long-term supporters when you have a strong desire to participate in the deal can lead to painful emotions. Databricks decided to issue additional shares and sent out a press release in July announcing that it had closed a new round at a valuation of $188 billion. (The company did not disclose the amount raised at the time.)
On Thursday, Databricks shared that it raised $5 billion from 1 paragraph worth of VCs that participated in the deal, increasing its valuation to about $190 billion. The $5 billion round was led by Coatue and several other companies, including Blackstone, MGX, various accounts affiliated with various divisions of T. Rowe Price, and new investor Sixth Street Growth. (Sixth Street was founded by former Goldman Sachs chief investment officer Alan Waxman.) About two dozen VC firms were named as participants.
Why were they so enthusiastic? Databricks seems like a solid choice.
Godoshi said the company’s annual run-rate revenue has reached $7 billion, is currently growing 80%, and is cash flow positive. The company’s core product, a cloud data warehouse, accounts for $1.5 billion of that utilization and is still growing 100% year over year, he said.
Additionally, Databricks comes with magical AI pixie dust. The company’s agent database Lakebase was launched in June 2025 and has a revenue run rate of $100 million. Genie, the company’s AI chatbot tool that allows on-the-fly business analysis, is “very popular,” he said.
So if the business is doing so well, why raise more capital? The company has already raised $20 billion in the past 20 months.
AI is expensive, Godi says. Databricks has multi-billion dollar cloud deals with all three major hyperscalers. “AI research is very expensive,” he said, adding that the company has a 100-person AI research team and it’s a highly competitive field.
Additionally, Databricks is shopping. “We’re doing a lot of M&A,” Ghodsi said, referring to the company’s announced acquisition this week of Electric, which makes the lightweight Postgres database PGlite, a way for agents to launch databases (terms not disclosed). In June, it acquired AI cybersecurity company Panther. In March, it acquired two startup companies.
There was a time when a $1 billion round was considered a large and difficult funding round. In this age of AI spending, startups are quickly raising $1 billion in seed/Series A, but that amount is now paltry.
Still, Databricks raising private funds instead of going public has become something of a meme in the Valley. When the company announced the funding last month, people joked online that it had raised so much money that it had run out of letters in the alphabet.
Godi told CNBC he still hopes to take the company public someday. With a huge pool of investors looking to cash out someday, what else can he promise?
But for now, he said he wants to focus on investing in AI. Given the cost involved, it’s probably a wise idea to do it out of the public eye.
Plus, what’s the rush when he can instantly pocket $15 billion in interest on his own terms?
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