Databricks CEO Explains Why He’s Delaying His Company’s Initial Public Offering (IPO) This Year
In a staggering move that has left the tech industry abuzz, Databricks has closed one of the largest funding rounds ever, raising a whopping $10 billion in fresh capital. The massive influx of funds has naturally led to questions about what this means for the company’s highly anticipated IPO. During an event in San Francisco on Tuesday night, Databricks CEO Ali Ghodsi shed some light on why he’s decided to put his plans for an initial public offering (IPO) on hold.
A Reasonable Decision
Ghodsi explained that this year was an election year, and with concerns about interest rates and inflation running high, it didn’t make sense to go through with the IPO. "We wanted to get some stability," he said in an interview with Dan Primack at the Axios AI Summit. "People are worried about interest rates, inflation… So we said, ‘Look, it’s dumb to IPO this year.’ So we’re definitely going to wait."
The earliest theoretical possibility of an IPO would be next year, but Ghodsi pointed out that there’s a lock-up period after an IPO during which employees can’t sell their shares. This would add to the already long period before employees could get liquidity.
Using the Funding to Fuel Growth
Databricks is using this "Series J" funding round to let early employees cash out and continue growing. Ghodsi noted that while 2024 was an uncertain year in many ways, the IPOs of companies like ServiceTitan and Reddit have largely been successful. However, he’s decided to take a cautious approach and focus on raising funds rather than risking it with an IPO.
A Lucrative Opportunity
Ghodsi revealed that this latest round could have been nearly double the amount they just closed. The data analytics company started out trying to raise $3 billion to $4 billion in this round, but press reports about their fundraising efforts drove interest through the roof.
"I saw an Excel sheet where they keep a tally of all the people that want to invest," Ghodsi said. "It was $19 billion of interest, and I almost fell off the chair… And we hadn’t even talked to everybody. I was like, ‘Oh my God, that’s a huge amount of numbers.’ So then we actually moved the price up."
A 2025 or 2026 IPO?
Even after the impressive fundraise, Ghodsi isn’t ruling out a Databricks IPO in 2025. However, he said it could be as late as 2026. He emphasized that going public is far less important than it was 10 to 15 years ago and pointed out that this record-breaking round shows that investors have faith in the company.
A Cautionary Tale
Ghodsi’s decision to put his IPO plans on hold might be seen as a cautionary tale for other companies. With the current market volatility, it’s essential to carefully consider when to go public and not rush into an IPO without proper planning.
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