Databricks Targets $1B Funding, Investors Seek $15B; Final Deal Concluded at $5B with $190B Valuation.

Late-stage startups often find themselves in a rather amusing situation regarding fundraising, where they may have to issue more shares than expected to keep their existing venture capitalists satisfied.

A recent example of this was Databricks, an AI big-data firm, which announced its new $5 billion funding round on Thursday, as shared by co-founder and CEO Ali Ghodsi with TechCrunch.

“Our initial goal was to raise $1 billion, but then The Information released an article about Databricks pursuing significant fundraising. This happened during our conference, where our attention was entirely on the event instead of fundraising,” Ghodsi recalled, referring to a conference held in June.

“Once that article went live, a surge of investors began reaching out. My phone was inundated with calls. The timing was terrible since we were laser-focused on our conference,” he noted.

This unexpected wave of interest transformed the news into a self-fulfilling prophecy.

“The interest level was unprecedented. Among the select investors we considered, there was an astonishing $15 billion in interest,” he elaborated.

When deal demand is this high, turning away some long-term supporters can create awkward feelings. To meet this demand, Databricks decided to issue further shares. By July, a press release announced the conclusion of its new funding round at an impressive $188 billion valuation, although the raised amount was not initially disclosed.

On Thursday, Databricks disclosed it had raised $5 billion from a select group of venture capitalists, increasing its valuation to a remarkable $190 billion. The funding round was spearheaded by Coatue, along with several partners including Blackstone, MGX, various accounts tied to T. Rowe Price, and new investor Sixth Street Growth, founded by former Goldman Sachs chief investment officer Alan Waxman. About two dozen VCs took part.

So, what sparked their enthusiasm? Databricks seems to be a solid investment.

Ghodsi indicated that the company achieved a $7 billion annualized revenue run rate, currently growing at 80% and is cash-flow positive. Its main offering, a cloud data warehouse, represents $1.5 billion of that run rate, reflecting a growth rate of 100% year-over-year.

Moreover, Databricks boasts the “magic AI pixie dust.” Its agent database, Lakebase, launched in June 2025, has already hit a $100M revenue run rate. Its AI chatbot tool, Genie, known for conducting real-time business analysis, “is extremely popular,” he remarked.

If the business is thriving, why seek additional funding? The company had already secured $20 billion in funding over the previous 20 months.

“AI is costly,” Ghodsi clarified. Databricks maintains multi-billion dollar cloud agreements with all three major hyperscalers. Additionally, “AI research is expensive,” he pointed out, mentioning that the company has a competitive AI research team of 100.

Furthermore, Databricks is actively pursuing acquisitions. “We engage in a lot of M&A,” Ghodsi said, referencing the recent acquisition of Electric, the creator of the lightweight Postgres database PGlite, designed for agents to generate databases (terms undisclosed). In June, it acquired AI cybersecurity firm Panther, and in March, it took over two startups.

In the past, a $1 billion funding round was seen as substantial and difficult to achieve. In today’s AI investment landscape, where startups often secure $1 billion for seed or Series A rounds, this figure appears minor.

Yet, Databricks’ private fundraising has become somewhat of a running joke among Silicon Valley insiders. When it announced its funding round last month, many humorously noted that it had raised so much capital that it might run out of letters in the alphabet.

Ghodsi mentioned to CNBC that he still hopes to eventually take the company public. With such a vast pool of investors eager for returns, how can he consider anything else?

For now, though, his focus remains on investing in AI. Given the associated costs, perhaps keeping this effort out of the public eye is the wise choice.

Besides, with an immediate $15 billion interest at his fingertips, and the ability to set the terms, why rush?