Databricks, the big data software giant, is reportedly in talks with T. Rowe Price Group Inc. for a new round of funding that could push its valuation beyond $43 billion. The discussions are said to be in a preliminary stage, and it is not guaranteed that an agreement will be reached. Databricks, which offers a data engineering platform for processing and transforming massive volumes of data, has the potential to revolutionize how enterprises handle big data analytics.
Unlike traditional big-data platforms such as Apache Spark, Databricks’ software is known for its speed and efficiency. It enables companies to process large amounts of data quickly and effectively, making it invaluable in the era of AI and machine learning. In addition to its speed, Databricks also offers strong security options, built-in data visualization tools, and enhances innovation and application development.
Databricks has already secured significant funding in the past. In February 2021, the company closed a $1 billion Series G funding round, which valued it at $28 billion. This was followed by an even larger $1.6 billion Series H round in August 2021, pushing its valuation to $38 billion. Altogether, Databricks has raised over $3.5 billion in funding, with T. Rowe Price participating in the previous two funding rounds.
Many analysts expected Databricks to go public with an initial public offering (IPO) as its next major funding move. However, these plans were reportedly put on hold due to a downturn in the stock market last year. In a June interview, Databricks CEO Ali Ghodsi stated that the company was well-capitalized and did not require additional funding. Nevertheless, Ghodsi suggested that a new funding round could be considered for strategic purposes.
Databricks is not only focused on securing funding, but it is also an active investor itself. The company has backed several startups in recent years, including Immuta Inc., a data security firm, Snowplow Analytics Ltd., a behavioral data analytics provider, and dbt Labs Inc., a data transformation company. These investments align with Databricks’ broader strategy of becoming a central player in the artificial intelligence industry.
In addition to its investments, Databricks has made strategic acquisitions to bolster its AI capabilities. This year, the company acquired Okera Inc., an AI data governance startup, and Rubicon Inc., an AI storage infrastructure provider. These acquisitions support Databricks’ pivot toward AI and its goal of unifying data and bringing AI into the data analytics process.
At the recent Databricks Data+AI Summit, the company announced several innovations in the field of large language models (LLMs). These included Lakehouse IQ, which uses LLMs to extract business meaning from technical data artifacts, and a platform for generative AI application development based on technology from its acquisition of MosaicML Inc. Databricks also unveiled new vector search capabilities to simplify content discovery for generative AI models and a Unity Catalog that harmonizes access to analytic data.
According to industry analysts, Databricks faces challenges from cloud infrastructure providers that have developed their own big data technologies for AI workloads. To compete with these providers, Databricks needs to enhance its AI capabilities, which can be costly and require additional funding. However, Databricks does offer a multicloud strategy that appeals to enterprises looking to avoid AI cloud lock-in.
Databricks’ ability to unify data and enable developers to build analytical AI applications across different data sources is a strong advantage. In a recent interview, Databricks co-founder and Chief Technologist Matei Zaharia discussed how the company’s latest announcements would accelerate its role in the future of generative AI.
The rumors of Databricks seeking more funding align with its focus on expanding its AI capabilities. By securing additional funding, the company can continue to innovate and solidify its position as a leader in the big data and AI industry. While the outcome of the talks between Databricks and T. Rowe Price remains uncertain, the potential for a valuation exceeding $43 billion highlights the growing importance of advanced data analytics and AI in today’s business landscape.
