Databricks is in discussions to achieve a valuation of up to $175 billion.

      **TL;DR** Databricks is in discussions to raise funds at a valuation between $165 billion and $175 billion, just four months after reaching a $134 billion valuation. CEO Ghodsi has hinted at a potential IPO as early as next year. Talks are in the preliminary stages, and the funding round is not yet finalized.

      According to a report from The Information on Monday, Databricks is negotiating a new funding round valued between $165 billion and $175 billion. This round could commence as early as next month, reflecting a 23% to 31% increase from the $134 billion valuation achieved in February.

      That February funding round was significant, amounting to approximately $5 billion, which included $2 billion in debt, marking it as one of the largest private capital raises in the AI sector. Databricks is looking to raise funds again before utilizing the previous round's capital, a trend observed among AI infrastructure firms eager to secure high valuations prior to going public.

      **The Numbers**

      In February, Databricks reported surpassing a $5.4 billion annualized revenue run rate, a 65% increase from the previous year. The company offers a data lakehouse platform that integrates data warehousing and lake capabilities, utilized by businesses for storing, processing, and analyzing large datasets crucial for AI models.

      With a valuation of $175 billion, the company would be priced at approximately 32 times its run rate. While this valuation may seem high by traditional software benchmarks, it aligns with the multiples seen for AI-related infrastructure firms in the private market.

      **IPO Positioning**

      CEO Ali Ghodsi has privately suggested to investors that Databricks is on track for an IPO, potentially as early as next year, as reported by The Information. A pre-IPO funding round at $165 billion to $175 billion would establish the baseline for a public offering.

      This timing places Databricks amidst a competitive landscape; OpenAI filed confidentially for an IPO this week, Anthropic filed last week, SpaceX lists on Thursday, and Bending Spoons filed on Monday. If Databricks proceeds with an IPO in 2027, it would enter a market that has already witnessed the largest AI listings to date.

      **What the Raise Signals**

      Securing funding at a 30% premium just four months after a $5 billion round indicates a strategy focused on valuation rather than an immediate need for capital. This move seeks to set the highest possible benchmark in the private market before transitioning to public offerings.

      However, there is a risk that private market enthusiasm may not reflect in public market pricing. As discussions are still in the early stage and the funding round is not finalized, the valuation range may be subject to change. Databricks has not yet responded to the report.