Sep 9, 2020 - Economy

Warren Buffett's Berkshire Hathaway to invest in Snowflake's IPO

Photo illustration of Warren Buffet's head popping out of a pile of snow.

Photo illustration: Aïda Amer/Axios. Getty Images photo: Taylor Hill/FilmMagic

Snowflake, a San Mateo, Calif.-based cloud data warehousing company, disclosed that Berkshire Hathaway and Salesforce Ventures each will purchase $250 million shares as part of its upcoming IPO. Berkshire also said it plans to buy around 4 million additional shares from insiders.

Why it matters: It's tough to square Warren Buffett's value investing philosophy with Snowflake, a tech unicorn without profits or a public trading history.

IPO details: Snowflake plans to offer 28 million shares at $75-$85, in addition to the direct $500 million purchases from Berkshire and Salesforce. It would have a fully diluted market value of $28.2 billion, were it to price in the middle.

ROI: The company has raised around $1.4 billion in VC funding, most recently at a $12.4 billion valuation, from firms like Sutter Hill Ventures (20.3% pre-IPO stake), Altimeter (14.8%), Iconiq (13.8%), Redpoint Ventures (9%), Sequoia Capital (8.4%), and Dragoneer.

The bottom line: "In 54 years, I don't think Berkshire has ever bought a new issue." — Warren Buffett, speaking to CNBC in May 2019

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