Databricks’ Value Could Reach $43 Billion in New Funding Round

Databricks is reportedly weighing a funding round that would value it at $43 billion.

The software maker is in talks with T. Rowe Price, Reuters reported Friday, citing people familiar with the matter. If the round succeeds, it would push the company’s valuation beyond the $38 billion achieved in a funding round in 2021.

PYMNTS has contacted Databricks for comment but has not yet received a reply.

Databricks CEO Ali Ghodsi told Bloomberg News last week that his company was well capitalized and didn’t need fundraising, but could consider raising money for strategic goals.

“There’s always talks with investors,” he said. “We’re getting inbound requests all the time.”

The report follows June’s announcement that Databricks was purchasing generative artificial intelligence (AI) startup MosaicML in a $1.3 billion deal designed to meet the rapid demand among businesses for their own version of ChatGPT.

The company said the purchase combines AI-ready data management technology with MosaicML’s language model tool. This will let customers create their own low-cost language models with proprietary data, rather than third-party language models trained on widely available online data.

“If you’re building a model from scratch, you know what you’re feeding it,” Ghodsi said then, adding that third-party models can give companies extraneous information that can skew results and expose them to privacy and security concerns.

PYMNTS reported in July, Databricks’ purchase of Mosaic was part of a “wave of takeovers of popular artificial intelligence companies that has revived Silicon Valley investment activity.”

As that report noted, valuations of tech startups have begun to fall more closely in line with their publicly listed counterparts, while venture-backed preferred equity in startups has fallen by a quarter since early 2022.

PYMNTS reporting has found that early-stage tech startups in the U.S. are seeing a significant drop in venture capital spending.

In the second quarter of this year, American investors backed 3,011 startup deals, which is a third fewer than the same period in the prior year.

Venture capital firms also lowered their spending, with the total amount just south of $40 billion, close to half of what was invested last year. The largest decline in funding was seen in angel or seed deals for startups in the concept phase.