Databricks is an artificial intelligence data management firm that has helped some of the world’s top-performing companies get the most from their business systems. The company provides access to cutting-edge AI tools, analytics, and other developer tools to improve efficiency and enhance offerings. Today, it operates as a core component of many Fortune 500 business models and more.
Demand for Databricks shares has been on the rise, as it is one of the best-known AI systems and data set providers globally. The company’s notoriety and constant innovations have helped drive interest in its operations. If Databricks were to go public, its IPO would have the potential to break many records.
For now, there are no public plans to host an IPO. However, you can still get your hands on some Databricks pre-IPO shares. Here’s what you need to know.
What is Databricks?
Databricks entered the market to enhance the Apache Spark analytics engine. Apache is used by more than 80% of Fortune 500 companies to streamline their data processing and retrieval services. In 2013, Ali Ghodsi, Andy Konwinski, Arsalan Tavakoli-Shiraji, Ion Stoica, Matei Zaharia, Patrick Wendell, and Reynold Xin founded Databricks to improve AI integration and Apache Spark capabilities. Notably, all the founders are alumni of the University of California, Berkeley.
In 2015, Databricks became a standalone protocol with features designed to help enterprise-level clientele build advanced AI systems that can scale to meet their needs. It also integrated advanced community governance options, enabling businesses to tailor their generative AI models based on user input.
Source – Databricks
Today, Databricks operates as an all-in-one AI and data management system. It allows businesses to develop, tune, and deploy generative AI models in a streamlined manner and with minimal coding. Additionally, the systems can integrate real-time data to improve performance.
Databrick Lakehouse Platform
At the core of Databricks offerings is the Lakehouse platform. This open-source protocol empowers businesses to develop, test, and deploy AI options. These protocols can reduce engineering costs, enhance data science access, improve machine learning algorithms, and better organize analytics.
Unity Catalog
The unity catalog is Databricks governance protocol. This system allows businesses to gather valuable information from clients and employees. Additionally, it includes an advanced auditing system that integrates AI to enable quick and easy management of funds. Businesses can utilize chat prompts to keep tabs on their finances.
Databricks SQL
DatabricksSQL is a Serverless datahouse that allows businesses to run SQL queries without bogging down their internal systems. The program simplifies data management so that any business can leverage real-time analytics to make informed decisions.
Data Science
Another unique option that Databricks offers is the Data Science collaboration tool. This system was built to help drive collaboration and innovation in the AI market. It features developer tools that support full scaling and group building.
Databricks Marketplace
The Databricks marketplace is a vital component of the ecosystem. Users can create AI models and datasets and then offer them to the rest of the community to secure rewards. The market is open to the public and features a variety of datasets, machine learning models, and in-depth analytics that can be used to create customized AI systems for your business.
Historical Funding Rounds
Summary of Databricks Funding:
- Total Funding: Databricks secured $9.67B across 13 funding round
- Largest Round: Databricks’s largest funding round secured $131M on December 27, 2021.
- Investors: A total of 74 institutional investors and 1 Angle investor back Databricks
- Latest Round: The latest funding round raised $5B and was a Series J round held on Nov 28, 2024.
Funding Rounds Breakdown:
- 3 Early-Stage
- 10 Late-Stage
Key Investors:
Databricks has strong support from key investors, including NVIDIA, Capital One, a16z, Fidelity Investments, Insight Partners and Tiger Global Management Baillie Gifford T. Rowe Price, Morgan Stanley, Fidelity Investments, Franklin Templeton Investments, Capital One Ventures, Ontario Teachers’ Pension Plan, , Baillie Gifford, ClearBridge, GIC, Octahedron Capital, Tiger Global Management, CapitalG, Amazon Web Services, Microsoft, AT&T, Qatar Investment Authority, Sanabil, Gaingels, Ghisallo Capital Management Morgan Stanley, Baillie Gifford, University of California, ClearBridge, a16z, Coatue, CPP Investments, Alta Park Capital, Discovery Capital, Gaingels, Dragoneer Investment Group, Green Bay Ventures, Flucas Ventures, New Enterprise Associates, Geodesic Capital, Insight Partners, The House Fund, Greenoaks, Fidelity Investments, CapitalG, Microsoft, a16z, Alkeon Capital Management, BlackRock, Coatue, Discovery Capital, Dragoneer Investment Group, Founders Circle Capital, GIC, and more.
Funding Data Sourced from Tracxn
Why Invest in Databricks?
There are lots of reasons why Databricks could be a great addition to your portfolio. For one, the company has shown a commitment to innovation. It continues to introduce new and more effective products to the enterprise AI market. These tools have helped some of the largest companies in the world simplify complex systems and improve efficiency.
Strong Investor Support
Few companies have institutional backing as strong as Databricks. The firm has support from tech and financial leaders across the market. It consistently secures private funding and is among one of the most recognized names in the market. Notably, the company secured $14M during its first round of funding in 2013 and has since locked in billions to expand its operations.
Databricks Partnerships
When you examine the client list that Databricks has amassed over the last decade, you will notice that it currently serves more than 10,000 organizations worldwide. Of these companies, 60% are Fortune 500 enterprises, including Microsoft, Comcast, Condé Nast, Rivian, Shell, and more.
Databricks Smart Acquisitions
Another strong reason to consider investing in Databricks is its continuous acquisitions. The company has made some smart maneuvers in this regard acquiring multiple tech companies which enhanced its capabilities. Specifically, in 2020, Databricks acquired Redash, improving its interactive interface options. From there, the company went on to acquire 8080 labs. In 2021, Datrabricks acquired the security firm Okera, further improving the platform’s capabilities.
How to Buy Databricks Pre-IPO Shares
Databricks remains a privately held company, meaning that you will need to utilize a specialized approach to get access to shares. Here is what you need to consider.
1. Pre-IPO Secondary Marketplace
Secondary markets are purpose-built exchanges that connect pre-IPO shareholders with potential investors. These marketplaces can offer these assets because they work closely with employees, early-stage investors, and venture capitalists, which are crucial to the company’s pre-IPO growth.
Investing in pre-IPO shares for Databricks could open the door for additional ROIs if the company’s valuation is less than when its IPO launches. It’s common for company valuations to increase following an IPO. As such, it makes sense to add pre-IPO shares to your portfolio before the firm announces plans to go public.
Secondary marketplaces have many requirements. Here are some concerns you should be made aware of:
Eligibility: Notably, this approach requires you to be an accredited investor, meaning you will have to show at least $1M in liquid assets to qualify.
Liquidity: Pre-IPO shares can’t be traded like regular shares. They often include some lockup restrictions that prevent you from trading them before the IPO. Some firms have permanent “no sell” clauses that prevent any transfer of the shares following your investment.
Linqto is a reputable investment platform that connects accredited investors with pre-IPO shareholders in a secure manner. The network streamlines pre-IPO investing via an easy-to-navigate interface that provides access to all relevant data at a glance. Accredited investors seeking pre-IPO shares in Databricks should consider Linqto.
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2. Private Equity Firms
Private equity firms gain access to pre-IPO shares during investment rounds. They then offer these shares to high-net-worth accredited investors with a commission. Notably, private equity firms are known to have extra stipulations, including blocking the sale of shares for years in some cases.
3. Employee Equity Sales
Many consider employee equity sales as the best way to acquire pre-IPO shares in Databricks. This method of acquiring pre-IPO shares requires you to connect with former employees. It’s common for companies to issue shares as part of an incentive package. Notably, this profit-sharing method has become more popular, leading to more pre-IPO share opportunities for investors.
Private Transactions: there are a lot of hoops you will need to jump through to complete a private pre-IPO transaction, including creating specific legal agreements, conducting valuations, and setting in place any limitations on the transfer of the asset.
Brokerage: Brokers will take a lot of the confusion out of the pre-IPO process. These professionals can guide you through each step, ensuring full compliance and avoiding common errors untrained professionals make.
There are several risks that you should consider before jumping into the pre-IPO shares investment arena. Here are the top concerns:
Liquidity Risk
If you are looking for an asset that you can sell right away, pre-IPO shares are not the best option. These investments can include sales and transfer clauses that prevent the transfer of the asset until certain criteria, such as the IPO’s completion. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.
Regulatory Risk
The blockchain market has seen considerable scrutiny from regulators and lawmakers. While the technology is far better understood than in its early days, there are still many lawmakers who see it as a threat to the traditional financial system. As such, you need to consider how new regulations could affect the value of your pre-IPO shares.
Market Risk
Purchasing pre-IPO shares in Databricks means that you stand behind the project and its team. The company has secured a reputation for excellence and has previously expressed a desire to go public. However, no concrete data has been provided yet. As such, it’s vital to understand that the blockchain market is an active space that experiences strong fluctuations that could result in a different share value between now and any future IPO launch.
Valuation of Databricks and Future IPO
Databricks has a valuation of $55B as of Nov 28, 2024. The company is one of the most successful AI enterprise firms in the market. It continues to see growing success, with reports showing the company reached $2.4B in annualized revenue in Q3 2024. This revenue growth represented a 60% increase over the previous year. Notably, this positive market activity has helped to drive interest in a Databricks IPO.
Databricks is an industry leader in the AI market, a fast-paced industry that already excites investors. As such, any mention of a Databricks IPO could send pre-IPO share values upward. Although no date has been mentioned, many analysts believe the company may go this route as its notoriety increases.
Databricks Pre-IPO Conclusion
Those who can access pre-IPO shares of Databricks could potentially see upside momentum. The company offers customized AI systems that can scale to meet global demand. As such, it’s quickly becoming a go-to option for large-scale businesses that want to utilize AI systems to cut costs.
There are several considerations you should think about before making any pre-IPO investment. Pre-IPO shares don’t have the same liquidity as normal IPO options, and in some instances, they can include no sale or lock-up stipulations. Additionally, there’s no guarantee that the company’s value will remain the same or increase between an IPO announcement and the actual event.
As such, you need to do your research to ensure the option meets your risk appetite. It’s also recommended that you consult a financial professional. Those who complete these tasks and can qualify for Databricks pre-IPO shares may find that the maneuver unlocks future upside potential.
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Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Pre-IPO shares are typically available only to accredited investors and carry significant risk. Always perform thorough due diligence and consult a financial advisor or legal expert before making investment decisions.
