Databricks Is Raising $10 Billion, in One of the Largest Venture Capital Deals

The artificial intelligence start-up’s funding shows investors remain enthusiastic about the A.I. boom.

In October, OpenAI, the start-up behind ChatGPT, raised one of the largest rounds of venture capital, bringing in $6.5 billion.

On Tuesday, another artificial intelligence start-up, Databricks, announced an even bigger haul: It is set to collect $10 billion in a new funding round, which would value the company at $62 billion.

The record fundings show that two years into an A.I. boom, investor enthusiasm for the technology has not waned. In recent months, some A.I. start-ups have struggled to find their footing and been sold or folded into larger companies. Even the fastest-growing companies are burning enormous sums of cash. OpenAI recently told investors that it expected to lose $5 billion this year on $3.7 billion in sales.

Investors remain bullish. Databricks, which was founded in 2013 and provides software tools for storing and analyzing large amounts of online data, said it expected in January to have more than $3 billion of “revenue run rate,” or monthly revenue extrapolated for a full year. It has morphed into an A.I. company in recent years, helping businesses build and operate the kind of software that drives chatbots and similar A.I. services.

The San Francisco-based company also said it expected to have a “positive free cash flow” for the three months ending Jan. 31, a sign that its income was mostly outpacing its spending. The company sells its products to more than 10,000 customers, including Shell and Comcast. More than 500 customers are on a pace to pay Databricks over $1 million a year for its offerings, the company said.

At a valuation of $62 billion, Databricks would surpass the market capitalization of its main competitor, Snowflake, which is publicly traded.

In a statement, Databricks said it had so far secured $8.6 billion of the $10 billion that it was raising. Ali Ghodsi, the chief executive and a founder of Databricks, said the rest of the round was “substantially oversubscribed.”

“These are still the early days of A.I.,” he said.

Databricks said it planned to use the money for new products, acquisitions and international expansion. It also plans to let its employees cash out some of their shares.

Allowing start-up employees to sell shares before a traditional “liquidity event,” such as an initial public offering or acquisition, is a growing trend among older tech start-ups. The time between a start-up’s raising funding and going public or selling has gotten longer over the past decade.

Plentiful venture capital in the private markets means companies are under less pressure to tap the public markets for funding. That trend has been especially acute in recent years as I.P.O.s have dried up and antitrust scrutiny of big tech companies has squashed acquisitions.

Some expect that I.P.O.s and deal-making will flourish next year under President-elect Donald J. Trump. But the hottest private tech companies, including Databricks, the payments firm Stripe and the rocket company SpaceX, have so much interest from private investors that they may choose to stay private and continue letting their employees and early investors cash out via private stock sales.

Thrive Capital, the New York investment firm founded by Joshua Kushner, led the funding. Thrive also led OpenAI’s round of funding in October. The firm, known for its early bets on Instagram, Stripe and Spotify, has been aggressively investing in the A.I. boom. In August, it raised $5 billion in new funds.

Databricks’ existing investors, which include Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management, also helped lead the round.

(The New York Times has sued OpenAI, claiming copyright infringement of news content related to A.I. systems. OpenAI has denied the claims.)

Cade Metz contributed reporting.

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