{"id":647069,"date":"2024-12-18T01:10:19","date_gmt":"2024-12-17T22:10:19","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/insight-vc-describes-databricks-wild-10b-deal-and-the-bad-advice-the-ceo-ignored\/"},"modified":"2024-12-18T01:10:19","modified_gmt":"2024-12-17T22:10:19","slug":"insight-vc-describes-databricks-wild-10b-deal-and-the-bad-advice-the-ceo-ignored","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/insight-vc-describes-databricks-wild-10b-deal-and-the-bad-advice-the-ceo-ignored\/","title":{"rendered":"#Insight VC describes Databricks’ wild $10B deal and the bad advice the CEO ignored"},"content":{"rendered":"
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It\u2019s been a wild week for investors clawing their way into\u00a0Databricks\u2019 record-breaking $10 billion fund raising, one of the VCs leading the deal told TechCrunch.<\/p>\n

\u201cThere were calls that went well late into the night, and that\u2019s okay, that\u2019s how good opportunities emerge,\u201d George Mathew, managing director at Insight Partners described with a grin. Along with new investor Thrive, Joshua Kushner\u2019s firm, Insight was one of the six firms who led the deal. All but Thrive were existing investors.\u00a0<\/p>\n

\u201cWe worked to make sure that we could be a co-lead, despite being already an investor on the cap table,\u201d Mathew said. Insight first invested in Databricks in 2021. But to get into this enormous deal, Insight had to tap into the Insight Partners Public Equities fund, which was set up to buy public stocks, under managing director John Wolff.\u00a0<\/p>\n

There was so much rabid interest that the allocation \u2013 and valuation \u2013 rose fast. In mid-November, the deal was on track to be around $8 billion, Reuters reported<\/a> at the time. A few days later, it was $9.5 billion at a $60 billion valuation, and by Tuesday, it had closed at $10 billion with a $62 billion valuation.\u00a0<\/p>\n

For perspective, this is bigger than OpenAI\u2019s $6.6 billion raise in October, the largest venture round of all time,<\/p>\n

\u201cThere was so much institutional demand and interest for a generational company,\u201d Mathew said. \u201cI\u2019ve been an investor at Insight for the last four years on all things related to data, AI, ML. This is the thing I live for.\u201d<\/p>\n

The investment involved a large secondary tender offer, where Databricks employees or other existing investors can sell shares. New preferred shares were issued to the new investor. Databricks didn\u2019t specify how much of the raise was secondary, except to call the $10 billion \u201cnon dilutive,\u201d which implies a good chunk.<\/p>\n

Interestingly, Databricks, founded in 2013, could have been a tragic tale. A decade ago its founders created a technology<\/a>, Spark, that was key to yesteryear\u2019s \u201cbig data\u201d trend. Spark helped enterprises analyze their in-house big data super fast.\u00a0<\/p>\n

With the rise of data hosted in the cloud, the company was processing data then handing it over to other players. It could have found itself slowly relegated to an irrelevant big data feature.<\/p>\n

Databricks cofounder and CEO Ali Ghodsi (pictured) sought out advice from Mathew, who had run big data company Alteryx as COO before becoming a VC. The two had been friends since Databricks\u2019 early days.<\/p>\n

\u201cAli called me a few years ago and said, \u2018Hey, I\u2019m thinking about going into the data warehousing market.\u2019 And I just said, \u2018That\u2019s the stupidest idea I\u2019ve ever heard\u2019. And I could not have been more wrong,\u201d Mathew laughs, adding he\u2019s glad Ghodsi didn\u2019t listen to him, nor hold his bad advice against him.<\/p>\n

At the time, traditional data warehouse vendors \u2013 which store vast amounts of enterprise data used for analytics \u2013 were also struggling against the likes of rising cloud stars like Snowflake and products owned by the cloud vendors, like AWS\u2019s Redshift.<\/p>\n

But, in late 2020 Databricks launched<\/a> its data warehouse product anyway \u2013 Databricks SQL \u2013 and quickly became a big Snowflake competitor.<\/p>\n

Then came LLMs, which are continuously thirsty for high-quality enterprise data. \u201cWhere is this high quality data coming from? For the enterprise, it\u2019s going to come from a place like Databricks,\u201d Mathew said.<\/p>\n

Flash forward to the end of 2024, with an IPO market still locked and investors dying to get a piece of AI infrastructure products, like data warehouses that can serve LLMs.\u00a0<\/p>\n

Databricks says<\/a> that by the end of its fiscal fourth quarter, it will be on a $3 billion revenue run rate, with a $600 million revenue run rate for Databricks SQL, up 150% for the year.\u00a0<\/p>\n<\/div>\n

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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s been a wild week for investors clawing their way into\u00a0Databricks\u2019 record-breaking $10 billion fund raising, one of the VCs leading the deal told TechCrunch. \u201cThere were calls that went well late into the night, and that\u2019s okay, that\u2019s how good opportunities emerge,\u201d George Mathew, managing director at Insight Partners described with a grin. Along…<\/p>\n","protected":false},"author":1,"featured_media":647070,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/techcrunch.com\/wp-content\/uploads\/2021\/04\/Ali_Ghodsi.jpg?resize=1200,1200","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[153244,61594,153026,151454,151477],"class_list":["post-647069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-databricks","tag-exclusive","tag-insight-partners","tag-tc","tag-venture"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/647069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=647069"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/647069\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/647070"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=647069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=647069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=647069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}