Who's Behind Databricks' Billion-Dollar Series G


By: Mary Jander

Databricks made headlines this week when it revealed its $1 billion Series G funding and valuation of $28 billion. But just as stunning as the numbers was the list of investors, which amounted to a Who’s Who of cloud companies and their backers.

Most notable were the contributions of Amazon Web Services (AWS), Microsoft (MSFT), CapitalG (formerly Google Capital and now Alphabet’s independent growth fund), and Salesforce Ventures — whose votes of confidence indicate momentum that could boost Databricks to make it to IPO or direct listing this year. Just as importantly, the endorsement is a loud and clear indicator of where public cloud services are headed.

The Common Thread is Data

Databricks, whose product lineup features a “data lakehouse” approach to gathering structured and unstructured data into a common location for machine learning, analytics, and efficient querying, seems to have joined a select but growing “in crowd” of cloud startups. That group, which also includes Lacework and Databricks competitor Snowflake (SNOW), have at least three things in common: a commitment to organizing massive floods of data, a devotion to machine learning and analytics, and an affinity for multi-cloud environments.

All of these things are in demand among the biggest public cloud providers, which are looking for ways to grow their services by supporting as much customer data as possible, in as many forms as possible, as efficiently as possible — and as profitably as possible.

Databricks, which was created in part from a series of innovations on existing open-source technologies such as Apache Spark, Delta Lake, and MLflow, has been able to integrate effectively into Azure and other cloud services, boosting their value. And Databricks’ usage-based, per-unit pricing also fits in well with cloud titans’ usage- and subscription-based pricing models.

Databricks claims over 5,000 customers worldwide, including Shell, Comcast, CVS Health, HSBC, T-Mobile, and Regeneron. Its growth is reflected in the way its valuation has more than tripled since its last round of funding in 2019. And the onset of the COVID-19 pandemic only seemed to add to its momentum, as cloud build-outs escalated with the move to remote work.

Investors Love Data

Besides the cloud titans, Databricks investors include names familiar from other enormous rounds involving cloud data management and analytics. Salesforce Ventures and Dragoneer Investment Group, for instance, were behind the $479 million Series G round that put data lake company Snowflake in line for what turned out to be the biggest software IPO ever — and certainly one of the biggest debuts of 2020.

And when security data cruncher Lacework garnered $525 million in Series D funding last month, a handful of the many Databricks investors showed up too — Dragoneer, Salesforce, Coatue, and Tiger Global Management.

Following the money, it’s clear that customers also overlap: Comcast, for instance, has been a customer of both Databricks and Snowflake. And HSBC, a showcase Databricks customer, has a small holding of shares in Snowflake.

What emerges from all this is that Databricks, like Snowflake and Lacework (along with a growing roster of firms such as Sumo Logic [SUMO]) are on the path to cloud’s future. Data analytics; artificial intelligence and machine learning; the ability to store and manage all types of data in centralized cloud-native environments; and integration across leading public clouds are all features that will generate not only more competition in this space but greater momentum toward enterprise digital transformation.