Databricks Turns Data Into Billions

Clean data is critical to modern applications like artificial intelligence (AI), and few companies have tapped into that trend as effectively as Databricks.

The 8-year-old San Francisco-based startup developed its Lakehouse architecture at the intersection of data warehouses and data lakes, and its subsequent growth – and adoption by nearly half of the Fortune 500 – has carried the private company to an astonishing $38 billion valuation, after its recent $1.6 billion Series H funding round.

Since February, Databricks has seen a $10 billion increase in its valuation by private equity markets, making it a top player in the enterprise AI space.

How Will Databricks Use the Funding?

How Databricks will use all that money has been the source of much speculation in the tech industry. For starters, Databricks plans to use some of that money to hire around 700 new employees in the next four months to improve sales, marketing, and research capabilities.

Another use for the funding, according to CEO Ali Ghodsi, is to boost the company’s market leadership in the data warehouse and data lake markets.

Databricks’ data Lakehouse architecture combines characteristics of a structured data warehouse and with that of unstructured data lake object stores. It’s expected that new features, security, and governance will be among the company’s development goals.

By upgrading its data Lakehouse technology, Databricks promises to help organizations clean up their messy data lakes and use a centralized, open and unified system for storing data. This can accelerate and improve data-driven decision-making for businesses of all sizes, making Lakehouse’s role even more vital for companies looking to improve operational efficiency and tap into the insights that modern analytics can offer.

The company’s competitors range from large cloud providers and tech giants like AWS, Azure, Google, IBM and SAS to other cutting-edge data management providers like Snowflake and Qubole and even open source tools like Hadoop. But with its founders’ background in critical data tools like the Apache Spark project, Databricks has been well prepared to take on the critical market.

Databricks’ Roots

Databricks rose to prominence when it assisted companies with implementing a version of Apache Spark. Apache Spark serves as a higher-performance alternative to the traditional Hadoop technology, which manages and analyzes massive amounts of unstructured and structured data.

Databricks over time has grown to help prominent companies like Shell, Comcast and Expedia deploy AI models and streamline their data processing.

So far, Databricks has earned the trust of a broad set of investors with different interests. Here are the names of some of those investors:

  • Andreessen Horowitz
  • Battery
  • Black Rock
  • Fidelity
  • Microsoft
  • Salesforce Ventures
  • Tiger Global

The A-list of investors and growing interest in the company’s data Lakehouse technology suggest that an IPO may be next, likely one of the most anticipated IPOs of recent decades.

COVID-19’s Impact on Enterprise Software

No industry has escaped unscathed from the adverse effects of the COVID-19 pandemic. Databricks turned out to be well positioned for the pandemic and the subsequent acceleration of cloud migration and automation.

As more companies make the digital transformation, Databricks will likely find itself even more in demand. According to Statista, growth in the enterprise software sector is returning this year after a notable decrease in spending last year.

In such a highly competitive market, Darabricks and competitors such as Snowflake, Cloudera and Dreamio will have to continue to find new, innovative ways to engage with the market and update their current technologies to appeal to various types of customers and clientele.

Databricks appears to be well positioned to be a leader in the growing enterprise software market, as it’s already formed partnerships with Amazon Web Services (AWS), Azure, and Google Cloud. While the future remains uncertain as the world recovers from the pandemic, Databricks’ future appears bright just on the confidence of its A-list investors.

Will Databricks Delay IPO?

Anything can happen in the enterprise software industry, as it’s a volatile market and fluctuations in funding and customer demand can occur. However, the savviest investors are placing big bets that Databricks will continue to expand its revenue and operations and emerge as a leader in the industry.

There are no guarantees in tech of course, but there’s already speculation that Databricks may delay its IPO because of the size of the recent funding round. That could turn out to be a long-term positive, as it will give the company time to solidify its growth and put off Wall Street’s quarterly performance demands.

But with AI and automation still in the early innings, and companies of all sizes that can benefit from those trends, there’s room for Databricks and its competitors to grow far into the future.

Further reading:

Databricks’ $1 Billion Funding Round Puts Focus on Data Management, AI

7 Ways To Build a Sophisticated AI Data Pipeline

The Coming AI Threats We Aren’t Prepared For

Devin Partida
Devin Partida is a technology and cybersecurity writer whose work has been featured on Entrepreneur, AOL, AT&T's cybersecurity blog, Yahoo! Finance, eSecurity Planet and Channel Insider. She is also the Editor-in-Chief of the tech website ReHack.com.

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