Databricks' Ghodsi after $10B fundraising round: "It's peak AI bubble"
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"It's peak AI bubble," DataBricks' CEO Ali Ghodsi told Dan Primack at Axios' AI+ Summit in San Francisco.
Why it matters: Earlier on Tuesday, AI company Databricks announced it had secured up to $10 billion in new funding — one of the largest investment rounds in Silicon Valley history — at a $62 billion valuation.
- "When you get billion dollar valuations on companies that have nothing, that's a bubble," Ghodsi said, referring to other companies.
Zoom in: When asked why he raised now, when he sees the market in a bubble, the CEO said that the decision came down to timing.
- "So six months ago, we were like, 'Hey, it's just dumb to IPO this year. Just wait, right? Let things settle, get more data,'" he said. "And then ... earliest theoretical possibility of an IPO would be next year. And then, you know, there's lock up periods and so on. So it would just be too long of a period for employees to get liquidity."
Behind the scenes: The 11-year-old company initially intended to raise $3 billion to $4 billion, at approximately a $55 billion valuation, Ghodsi said. But as the press reported on news of the fundraise, investors started calling and the prices went up, he told Primack.
- At one point, he said, there was $19 billion of interest in the funding in the company, which has $3 billion in ARR.
- "It started around 80 bucks a share, and ended up at $92.50 so, yeah," he said, noting that they cut back the investors and took about half the interest.
- The funding came from Thrive Capital and also includes investments from Andreessen Horowitz, DST Global, Abu Dhabi-based MGX, Wellington Management, and Capital Group, among other existing investors.
What's next: This does not mean the company will not go public in 2025, which Ghodsi said is the earliest possibility, but it could also very well happen the year after.
- "I do think the majority of the lifetime of Databricks will be as a public company, even though we're not public yet," he said.
One AI thing: When asked what one thing he'd like President-elect Trump's AI czar to do, Ghodsi said, "Be careful with regulation. Look at use cases, but don't hold research back."
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