IPO inevitable for Databricks after adding $5B in funding

Databricks keeps raising funding. After revealing in July that it was in the process of securing new financing, Databricks on Thursday closed on $5 billion in venture capital funding at a rate that values the company at $190 billion and brings its total financing over $32 billion. But after raising $5 billion or more in four separate funding rounds -- including $10 billion in December 2024 -- the question isn't what the data management and AI vendor should do with the money or whether it can raise more. Instead, it is what Databricks should do next. While many data management and analytics vendors are struggling to attract investors, there seems to be an endless supply of private capital willing to invest in Databricks. Beyond rounds exceeding $5 billion, the vendor raised $2 billion in debt financing in February and added $1 billion or more three additional times. However, an eventual initial public stock offering would be more advantageous for Databricks than continuing to raise private funding, according to Michael Ni, an analyst at Constellation Research. "Staying private has allowed Databricks flexibility to ignore public scrutiny on its profitability and predictability, but a successful public IPO could provide a growth flywheel," he told TechTarget. Specifically, if the public markets respond positively to Databricks' continued additions of data and AI stack components, a healthy stock price would give the vendor greater flexibility to expand than raising private funding, he continued. In addition, going public -- and the need to respond to public-market sentiments -- would make it easier for the CIOs of potential customers to make Databricks part of their AI and data architectures. "The value in an IPO would go beyond the cash raised, enabling Databricks to move from a successful private platform to a consolidator and long-term standard for the...