The AI and big data firm Databricks officially unveiled its latest funding round on Thursday, raising $5 billion at a valuation of $190 billion. Interestingly, the company initially aimed to secure just $1 billion, but an unexpected news report ignited a surge of investment interest, forcing a significant increase in the round's size.

Dramatic Funding Process

CEO Ali Ghodsi disclosed that the company's original plan was to raise only $1 billion. However, during a company conference in June, a media outlet published an article claiming Databricks was in the midst of a massive fundraising effort. Following the report, Ghodsi's phone was flooded with calls, as investors lined up to participate, with total interest quickly soaring to $15 billion. "The timing couldn't have been worse. We were fully focused on the conference and not even working on fundraising," Ghodsi recalled. Faced with overwhelming demand, turning away some long-time supporters risked damaging relationships. So the company decided to issue more shares, ultimately closing the deal in July. The valuation was pushed from the initially disclosed $188 billion to a round $190 billion. The round was led by Coatue, with participation from about twenty institutions, including Blackstone, MGX, T. Rowe Price accounts, and new investor Sixth Street Growth.

Why the Frenzy from Investors?

Ghodsi's answer was straightforward: the company's fundamentals are strong enough. Databricks currently boasts an annualized recurring revenue of $7 billion, growing at 80%, and has achieved positive cash flow. Its core product, the cloud data warehouse, contributes $1.5 billion in annualized revenue, still growing at 100% year-over-year. The agent-oriented database Lakebase, launched last June, has surpassed $100 million in annualized revenue, and its AI chatbot Genie is also "extremely popular."

Why Continue Raising Funds?

Despite having accumulated $20 billion in funding over the past 20 months, Databricks chose to keep raising capital. Ghodsi explained that AI is incredibly costly: the company has multi-billion dollar cloud commitments with each of the three major cloud providers and maintains a 100-person AI research team, facing intense competition and high expenses. Additionally, the company remains active in mergers and acquisitions—having just acquired the lightweight Postgres database firm Electric this week, bought AI cybersecurity company Panther in June, and picked up two startups in March.

IPO Attitude: Not in a Rush

Ghodsi stated that he still hopes to take the company public one day. However, given its ability to easily attract $15 billion in interest and set its own pricing pace, the focus is currently on investing in AI rather than rushing into the public markets. In the era of AI spending, a $1 billion fundraising round is considered a "small deal." For a company like Databricks, which can sustain high growth while having investors eager to get in, there is clearly no hurry to ring the bell.