Technically speaking - "FUCKED"

In India, Zomato[0] (now listed) and Swiggy[1] both had a Series K. SpaceX has only gotten to a Series J, but they've done some secondary sales since. Apparently, Palantir[2] has had a Series K as well, back in 2015.

[0]: https://appedus.com/indias-zomato-raised-500-million-in-seri...

[1]: https://techcrunch.com/2022/01/24/indian-food-delivery-giant...

[2]: https://www.finsmes.com/2015/12/palantir-technologies-raises...

A new round is easier than IPO. Especially when the IPO outcome is not necessarily positive.

If the private markets can offer you the liquidity you need on your terms, then why subject yourself to the scrutiny of the public markets?

Plus the markets are in a weird state right now.

IPO needs real numbers, VCs just want buzzwords

Because they don't want the public market to put a real valuation on the company, when they can still raise money with a made up valuation.

An order of magnitude less scrutiny, but also an order of magnitude in size of investor base. The private markets trade at Palantir levels so why go public. Also the private markets are now routinely doing secondary transactions so even less reason to go public.

Stock dilution doesn't work like that. If a seed investor invests for 5% at a $10mil valuation, and the company goes 10x (ie. a valuation of $100mil), if the company now raises a $100mil Series K, that means the Series K investor owns 50% of the company, and the seed investor got diluted down to 2.5%. However, the new valuation of the company is now $200mil with the cash that the new investor brought in, effectively making the seed investor's investment worth the same.

It's a smaller piece of a bigger pie.

To answer your question, the right question to ask is why go public when you can remain private? Public means more paperwork, more legalese, more scrutiny, and less control for the founder, and all of that only to get a bit more liquidity for your stock. If you can remain private, there really isn't much of a reason to not do that.

Investors put 10 billion in in a previous round; that's a lot. Somehow, more is needed now. 100M is just 1% of that. So it's not going to massively move the needle. But it does raise the question where all that cash is going.

My guess is that they might be about to embark on a shopping spree and acquire some more VC backed companies. They've actually bought quite a few companies already in the past few years. And they would need cash to buy more. The company itself seems healthy and generating revenue. So, it shouldn't strictly need a lot of extra capital. Acquisitions would be the exception. You can either do that via share swaps or cash. And of course cash would mostly go to the VCs backing the acquired companies. Which is an interesting way to liquidate investments. I would not be surprised to learn that there's a large overlap with the groups of VCs of those companies and those backing databricks. 100M$ on top of 10B sounds like somebody wants in on that action.

As a financial construction it's a bit shady of course. VCs are using money from big institutional investors to artificially inflate one of their companies so that it can create exits for some of their other investments via acquisitions financed with more investment. It creates a steady stream of "successes". But it sounds a bit like a pyramid game. At some point the big company will have to deliver some value. I assume the hope is some gigantic IPO here to offload the whole construction to the stock market.

Definitely seem like bad investments from my perspective on databricks.

Databricks is great at offering a "distributed spark/kubernetes in a box" platform. But its AI integration is one of the least helpful I've experienced. It's very interuptive to a workflow, and very rarely offers genuinely useful help. Most users I've seen turn it off, something databricks must be aware of because they require admins permission for users to opt out of AI.

I don't mean to rant, there's lots that is useful in databricks, but it doesn't seem like this funding round is targeting any of that.

I'm as skeptical as anyone, but have you ever heard of companies like Oracle, which got rich off a database or Snowflake (current market cap 65B)? Companies pay oodles of money for that capabilities.

I’d imagine pretty much all of the s and p 500 companies rely on databricks, a large percentage of them at least

If their options haven't converted to stock yet, it's not looking good. This is the sort of shenanigans that demand a strike. And ideally regulation.

I think that's the main offering of databricks- you get a "data platforn in a box" and navigating the forest of piecemeal solutions is replaced with telling your data science and analytics teams to "use databricks".

It's easy to look on knowing lots about data tools and say "this could be better done with open source tools for a fraction of the cost", but if you're not a big tech company, hiring a team to manage your data platform for 5 analysts is probably a lot more expensive than just buying databricks.

It feels like they may have got market share using low costs and this has led to this situation.

They were expecting to be cash flow positive in Jan 2025, according to [0]. That said, it is hard to tell if they actually became cash flow positive since with them still being a private company, they aren't required to release that information.

[0]: https://www.databricks.com/company/newsroom/press-releases/d...

At least it is not unprecedented. Palantir raised a series I in 2020 after 17 years of operation.

Even more if you are familiar with their pricing.

Do we know that they need to raise and are not sustainable? I don't think them raising is evidence of either.

Imagine the funding they get 10 years later when they finally do a AAA round.

/s