There’s a funny kind of game that the latest of late-stage startups must play when raising money. They often have to sell more shares than they want or risk offending some of their existing VCs.
“We wanted to raise $1 billion, but then The Information printed this article saying that Databricks is doing a big fundraise. They did that in the middle of our conference. We were heads down with our conference, and we were not actually at all focused on fundraising,” Ghodsi recalled, referring to a conference that took place in June.
“As soon as that article went out, there was a long line of investors that started calling. My phone blew up. It was like the worst timing for us because we were busy with our conference,” he said.
It was an enviable problem that turned the news report into a self-fulfilling prophecy.
“The interest level was just insane. Just from this select group of investors that we looked at, there was $15 billion of interest,” he said.
On Thursday, Databricks shared it raised $5 billion from a paragraph worth of VCs that it let in on the deal and that its valuation pushed higher to a nice round $190 billion. The $5 billion round was led by Coatue and several others, including Blackstone, MGX, various accounts associated with various arms of T. Rowe Price, and new investor Sixth Street Growth. (Sixth Street is the firm founded by former Goldman Sachs chief investment officer Alan Waxman.) About two dozen VCs were named as participants.
Why were they all so eager? Databricks seems like a sure bet.
Ghodsi said his company has hit $7 billion of annualized run rate revenue, which is currently growing at 80% and is cash-flow positive. Its core product, a cloud data warehouse, is $1.5 billion of that run rate, and still growing at 100% year-over-year, he said.