Databricks Aims for $1B, Investors Push for $15B—Final Deal Reached at $5B with a $190B Valuation

Late-stage startups often find themselves in a tricky situation while raising funds. They sometimes need to sell more shares than planned to avoid upsetting their existing investors.

This situation unfolded recently for Databricks, an AI big-data firm, which announced a $5 billion funding round. Co-founder and CEO Ali Ghodsi shared insights with TechCrunch about the unexpected turn of events.

“Initially, we aimed to raise $1 billion, but then a news article surfaced, indicating that Databricks was seeking significant funding. This happened while we were engrossed in our conference in June,” Ghodsi recalled.

“The moment the article was released, our phones started ringing off the hook with investors wanting to connect. The timing couldn’t have been worse for us as we were fully committed to the conference,” he noted.

This resulted in an unexpected surge of interest from potential investors.

“The level of interest was astonishing. Among the investors we were considering, there was $15 billion willing to invest,” he added.

With such overwhelming demand, turning down long-time supporters could lead to dissatisfaction. Consequently, Databricks opted to increase its share offering and, by July, announced the completion of its funding round with a valuation of $188 billion, although they didn’t disclose the sum raised at that time.

On Thursday, Databricks revealed that it successfully obtained $5 billion, welcoming a select group of investors into the fold and boosting its valuation to a staggering $190 billion. The funding round was primarily led by Coatue, alongside other notable participants including Blackstone, MGX, and various accounts tied to T. Rowe Price and new investor Sixth Street Growth, founded by ex-Goldman Sachs chief investment officer Alan Waxman. Around 25 VCs were mentioned as part of this round.

The eagerness of these investors can be attributed to Databricks’ promising outlook.

Ghodsi mentioned that the company has achieved a remarkable annualized revenue run rate of $7 billion, experiencing an 80% growth rate while maintaining positive cash flow. Its primary product—a cloud data warehouse—accounts for $1.5 billion of that revenue, growing at 100% year-over-year.

Additionally, Databricks boasts innovative technology. Their database for AI models, Lakebase, debuted in June 2025 and reached a revenue run rate of $100 million. Its AI-driven chatbot tool, Genie, which provides real-time business analysis, has gained significant popularity.

If all is going well, why continue to seek additional funds? The company had previously raised $20 billion over the last 20 months.

“AI development is costly,” Ghodsi explained. Databricks has made sizable cloud commitments with all three major cloud providers. He noted that “AI research is also very expensive,” which is critical since the company has a team of 100 dedicated to this competitive field.

Furthermore, Databricks is on the lookout for acquisitions. “We engage in numerous M&A activities,” Ghodsi stated, referring to a recent acquisition of Electric, known for its Postgres database, which aids in database management. They also acquired AI cybersecurity firm Panther in June and two more startups earlier this year.

In the current landscape, where AI-focused startups are frequently raising $1 billion at the seed or Series A stage, what once seemed like a massive amount now feels rather small.

Despite the success in private funding, some in Silicon Valley have started to joke about Databricks’ extensive fundraising, suggesting it might soon run out of letters in the alphabet.

Ghodsi expressed to CNBC his aspiration to eventually take the company public. With a large array of investors eager for returns, it will be challenging to make promises, especially regarding a timeline.

For now, his focus remains on investing in AI. Considering the significant expenditures involved, seeking funds privately may prove to be a strategic choice.

Additionally, given the instant interest from potential investors amounting to $15 billion, there doesn’t seem to be a pressing need for urgency.