The robust equities market of 2020 and 2021 brought a rush of fresh initial public offering (IPO) listings to Wall Street. Nearly every sector was represented in the bonanza, including offerings from the cryptocurrency, technology, and manufacturing spaces. Of all tech companies that planned to make their 2021 market debuts, the Databricks IPO garnered extensive fanfare and coverage.
What Is Databricks?
Founded in 2013, Databricks is self-described as being "the world's first and only lakehouse platform in the cloud that combines the best of data warehouses and data lakes to offer an open and unified platform for data and AI."
In simpler terms, Databricks is an enterprise software company that specialises in creating custom solutions for big data. Key functionalities include data analytics, data engineering, and artificial intelligence (AI) applications.
The industry nomenclature and jargon local to Databricks can be confusing. The following is a brief look at the important terms:
- Data Warehouse: A data warehouse is a centralised repository of information that can be readily analysed.
- Data Lake: A data lake is a centralised repository that supports the storage of unstructured and structured information on any scale.
The Lakehouse Platform is the featured product from Databricks. It is designed to combine the information quality of a data warehouse with the flexibility of a data lake. In doing so, the company is able to provide clients with a real-time analytics platform, data platform and machine learning platform all in one place.
Databricks Partnerships And Affiliations
Headquartered in San Francisco, California, Databricks has a global reach that spans upwards of 5,000 organisations. The company also maintains partnerships with more than 450 international firms that provide services on the Databricks Lakehouse Platform. The partners are divided into three segments: cloud, technology and consulting.
Below is a segment-by-segment synopsis and examples of partner companies.
Databricks Lakehouse is supported on all established public clouds. Featured cloud partners are Microsoft Azure, Amazon Web Services (AWS), Google Cloud, Alibaba Cloud.
With Partner Connect, the Databricks Lakehouse integrates data analytics and AI tools in one place for rapid solution development. Technology partners include Alation, Denodo, Fivetran and Mathworks.
The company's consulting partners aid customers in building or migrating operations to the Lakehouse Platform. Databricks maintains consulting partnerships with many firms, including Accenture, BitBang, Carahsoft and DataSentics.
One collaboration worthy of note is Databricks involvement with the Salesforce Einstein project. Einstein is an AI module that is built directly into the Salesforce platform. It uses Apache Spark and Databricks to power the module and scale data engineering.
Databricks Corporate Leadership
The roots of Databricks can be traced to the world of academia and the open-source community. The company's founders were local to the University of California (UC Berkeley) and developers of Apache Spark, Delta Lake and MLflow. This group of individuals continues to hold executive, managerial and operational positions within the company:
- Ali Ghodsi, Co-founder and Chief Executive Officer (CEO)
- Ion Stoica, Co-founder and Executive Chairman
- Matei Zaharia, Co-founder and Chief Technologist
- Patrick Wendell, Co-founder and VP of Engineering
- Reynold Xin, Co-founder and Chief Architect
- Andy Konwinski, Co-founder and VP of Project Management
- Arsalan Tavakoli-Shiraji, Co-founder and SVP of Field Engineering
The onset of the coronavirus (COVID-19) pandemic brought the need for online data solutions to the forefront of business. As a result, many big data technology companies grew exponentially. Databricks was no exception, gaining a collection of high-profile backers and generating a private valuation north of US$38 billion during Q3 2021.
Funding Round Highlights
- 25 September 2013, Series A: The company raised US$14 million from three investors. The lead investor was Andreessen Horowitz.
- 30 June 2014, Series B: The company raised US$33 million from three investors. New Enterprise Associates acted as the lead investor.
- 15 December 2016, Series C: Three investors contributed US$60 million in funds to Databricks. Once again, New Enterprise Associates acted as lead.
- 22 August 2017, Series D: Five investors contributed a total of US$140 million to the company. For the second time, Andreessen Horowitz was the head investor.
- 5 February 2019, Series E: A total of eight investors, led by Andreessen Horowitz, posted US$250 million to Databricks.
- 22 October 2019, Series F: Eleven private investors financed a total of US$400 million to the company. For the fourth funding round, Andreessen Horowitz acted as the lead investor.
- 1 February 2021, Series G: Twenty-three separate firms pledged a whole of US$1 billion in funds to the company. The Series G lead investor was Franklin Templeton Investments.
- 31 August 2021, Series H: A total of 27 investors contributed an aggregate sum of US$1.6 billion to Databricks. The Series H round was led by Counterpoint Global, a Morgan Stanley fund.
From being a software startup at UC Berkeley to a global leader in big data and AI, Databricks has attracted billions in venture capital. Some of the most notable names in finance have allocated funds to the company, such as T. Rowe Price and Tiger Global Management.
The extremely successful private funding rounds of 2021 brought into question when, how and if Databricks was going to launch an initial public offering. The topic actually became a subject of rampant speculation. Nonetheless, following the successful tech IPOs of Gitlab (US$15 billion), Toast (US$31 billion) and Couchbase (US$23 billion), many believed it to be only a matter of time before Databricks hit Wall Street.
On the other hand, the company's massive Series H round brought talk of Databricks staying private. When the US$1.6 billion Series H round completed, CEO Ali Ghodsi stated that the new capital "does not push out the IPO."
In the event that the company eventually goes public, it will do so in one of three ways:
The traditional IPO process occurs when a private company becomes a publicly traded entity. As a rule, the progression involves selecting an underwriter, disclosing financial information, pre-market share pricing and the execution of a public sale.
A direct listing (DL) takes place when a company foregoes the IPO process and sells shares directly to the public. The primary reasons for a DL are reduced costs, pricing freedom and no "lockup" restrictions for insider share sales.
A special purpose acquisitions company (SPAC) is a shell company that has the sole purpose of raising money through an IPO for the acquisition of another company. When a SPAC purchases a secondary company, that firm's shares become publicly traded. Going public through a SPAC offers the acquired company an avenue by which to circumvent the traditional IPO process.
According to Reuters, Ghodsi has been quoted in favour of the SPAC option. In a widely circulated story from 31 August 2021 (U.S. News, Fidelity, Forbes), Ghodsi states: "I think SPACs are much better suited for companies that maybe have difficulty IPOing on their own and have difficulty getting those kinds of investments from the kind of mutual funds that we're talking about."
As of 1 December 2021, the final Databricks IPO date and means by which the company will enter the public realm remains unknown.
Databricks had not filed its official S-1 form with the United States Securities and Exchange Commission (SEC). The company's initial SEC registration reads as follows:
- State of Incorporation: Delaware
- Fiscal Year End: 31 December
- Business Address: PO BOX 171305, Salt Lake City UT 84117
- Registration Date: 9 April 2021
If the company does elect to go public, shares of Databricks stock would be listed on either the New York Stock Exchange (NYSE) or NASDAQ. Ahead of the offering, new investors are well advised to be on the lookout for the official Databricks S-1 filing with regulators.
Databricks is an enterprise software company, based in San Francisco, California. It was founded in 2013 at the University of California Berkeley. Since that time, the company has raised more than US$3.5 billion in venture capital and has a projected valuation upwards of US$38 billion.
A final Databricks IPO date remains unknown.
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