Ali Ghodsi, the CEO of Databricks, told Insider that the most important aspect of the mammoth $1 billion Series G round of venture capital his company announced Monday – which takes it to a $28 billion valuation – is investment by all three of the largest cloud-computing firms: Amazon, Microsoft, and Google.
“I don’t think people realize how important those three vendors are going to be,” Ghodsi told Insider. “This round is really about deepening those relationships.”
Databricks, a 2012 San Francisco company of some 1,700 employees, helps enterprises quickly analyze and use vast amounts of data with analytics tools and starter kits for building the algorithms that help companies find and use key insights. It had previously raised just under $900 million at a valuation of $6.2 billion.
Ghodsi believes the new investment round uniquely positions Databricks to capitalize on the emergence of AI as a staple part of many enterprises.
“That’s where the data is going to be, and we are going to be right there to help companies use it. These three vendors are going to be very important, I believe, in how technology and business develops over the next decade,” Ghodsi told Insider.
The investment takes Databricks to a colossal $28 billion post-investment valuation, Ghodsi said, and it helps it “step on the gas” for acquisitions and an initial public offering.
“We are interested in M&A activity,” Ghodsi told Insider. “There are a lot of startups that have great ideas and great technology but may be struggling during the pandemic. It’s hard to start a company right now, and we’re looking at being able to acquire and pay in cash, rather than just offering them equity.”
Ghodsi said his company is building the executive team for an initial public offering, including chief financial officer Dave Conte, who helped Splunk go public in 2012. He did not say when Databricks is looking to go public, but said there is a “clear timeline.”
The round, led by new investor Franklin Templeton, includes other new investors including Canada Pension Plan Investment Board, Fidelity Management & Research, and Whale Rock. Four cloud companies are involved as “strategic investors” – Amazon Web Services, CapitalG (Google parent company Alphabet’s private equity firm), Salesforce Ventures, and Microsoft, which is expanding its previous investment. Andreessen Horowitz and financial firms BlackRock, T. Rowe Price, and Tiger Global Management also participated.
The financial companies “wanted to invest billions into the company,” Ghodsi said. “We were trying to figure out how to fit everybody in. You know initially we wanted to raise $200 million and we then $500 million, and we had to sort of draw the line at $1 billion and say that’s it.”
Microsoft said the deal is an investment in its cloud computing future with Databricks. “Our investment underscores the vision we share with Databricks of simplifying data and AI for our customers,” said Scott Guthrie, executive vice president of cloud and AI in a statement. “We will continue to build on the success of Azure Databricks and seamless integrations.”
Ghodsi said AI is at a pivotal point moving from the collection of data to its application. “In the early days people would evaluate their data by measuring it by size, but that was just potential and actually using it brought huge delays. We want to give them a very clean way to access it and use it.”
Ghodsi, whose family had to flee its home within 24 hours to escape the Iranian Revolution in the late 1970s, said that the experience of being a child refugee has made him a better leader.
“I think it’s the number one thing that has helped me because, you know, I was never with just one type of person or in one type of environment,” he said. “It was kind of stressful changing schools nine times, but it is a thing that helps you actually understand how to get along with people.”
He predicts that others with similar experiences will “make it all the way through” their struggle to reach great business or other leadership heights. “Because that kid has a chip on their shoulder, and didn’t get everything served to them on a silver platter. And that will drive them to success.”