Late-stage startups often face an unusual dilemma when raising capital: they must sell more shares than originally planned, or risk alienating long-standing investors who are eager to get in on the deal. This scenario recently played out with Databricks, the AI-powered data analytics company, which announced a $5 billion funding round on Thursday.
In an interview with TechCrunch, co-founder and CEO Ali Ghodsi recalled that the company initially sought just $1 billion. However, a report from The Information, published during Databricks' June conference, sparked unprecedented investor interest.
“We were heads down with our conference, and we were not actually at all focused on fundraising,” Ghodsi said. “As soon as that article went out, there was a long line of investors that started calling. My phone blew up. It was like the worst timing for us because we were busy with our conference.”
The news report turned into a self-fulfilling prophecy. “The interest level was just insane. Just from this select group of investors that we looked at, there was $15 billion of interest,” he added.
With that level of demand, telling long-term backers “no” would likely create hard feelings. So Databricks decided to issue more shares. In July, the company announced it had closed its new round at a $188 billion valuation, though it did not disclose the amount raised at the time. Thursday's announcement confirmed the round totaled $5 billion, with the valuation bumped to a neat $190 billion.
The round was led by Coatue, with participation from Blackstone, MGX, accounts associated with T. Rowe Price, and new investor Sixth Street Growth—a firm founded by former Goldman Sachs chief investment officer Alan Waxman. In total, roughly two dozen venture capital firms were named as participants.
Why such enthusiasm? Databricks appears to be a safe bet in the AI boom. Ghodsi noted that the company has reached $7 billion in annualized run-rate revenue, growing at 80% year-over-year, and is cash-flow positive. Its core cloud data warehouse product alone contributes $1.5 billion to that run-rate, with 100% annual growth.
Beyond the core business, Databricks is leveraging its “AI pixie dust.” Its agent-focused database, Lakebase, launched in June 2025, has already hit a $100 million revenue run-rate. The AI chatbot tool Genie, which provides on-the-spot business analysis, is “insanely popular,” according to Ghodsi.
Given the strong performance, why raise more capital? The company had already accumulated $20 billion over the past 20 months. The answer, Ghodsi explained, is that AI is expensive. Databricks has multi-billion dollar cloud commitments with all three major cloud providers (AWS, Microsoft Azure, and Google Cloud), and scaling AI infrastructure requires significant upfront investment.
This latest round underscores a broader trend in 2026: AI companies are commanding massive valuations as investors double down on the sector's growth potential. For Databricks, the challenge now is to manage that growth while maintaining the trust of both its investors and its customers.
via TechCrunch AI