Nancy Pelosi, Cathie Wood, Nvidia-Backed Databricks Waits To Go Public: 'Dumb To IPO' In Election Year

Cloud-based private company Databricks isn't in a rush to go public.

What Happened: While the San Francisco-based company is experiencing growth and was recently valued at $62 billion, 2024 wasn’t the year to file an initial public offering, Databricks CEO and co-founder Ali Ghodsi said at the recent Axios AI Summit.

"This year was an election year. We wanted to get some stability — people are worried about interest rates, inflation,” he said, as reported by TechCrunch. “So we said ‘Look, it's dumb to IPO this year,’ so we're definitely going to wait.”

Ghodsi said the recent Series J round allowed some early employees the ability to cash out. The funding round, which was large at $10 billion, could have been larger based on demand, according to Ghodsi.

"I saw this Excel sheet where they kept a tally of all the people that want to invest. It was $19 billion of interest, and I almost fell off the chair,” he said.

The original goal was to raise $3 billion to $4 billion, before the company pushed the funding amount higher.

While Databricks didn't choose the IPO route in 2024, the company could be one of many to go public next year.

"The earliest theoretical possibility of an IPO would be next year,” Ghodsi said, noting that the IPO could also push out to 2026 instead. It's less important to go public now than in past years, he explained.

Ghodsi also recognizes that high interest in artificial intelligence companies and ballooning valuations could signal a potential bubble for the sector.

"I mean, it's peak AI bubble. It doesn't take a genius to know that a company with five people which has no product, no innovation, no IP — just recent grads — (is not) worth hundreds of millions, sometimes billions."

Billion-dollar valuations on AI startups that have no product signal a bubble, Ghodsi added.

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Why It's Important: A potential IPO of Databricks could come with high investor interest thanks to its high growth and popular backers, including Nvidia Corporation NVDA, U.S. Rep. Nancy Pelosi (D-Calif.) and Cathie Wood.

Pelosi and her venture capitalist husband Paul Pelosi took a $1 million to $5 million stake in the company according to a filing from the former Speaker earlier this year.

Pelosi represents District 11 of California in the U.S. House of Representatives. The region includes San Francisco, where Databricks is based.

Wood and Ark Invest own a stake in the company through the Ark Venture Fund (ARKVX), which launched in 2022 and gives investors access to private companies. Databricks is the tenth largest holding in the fund as of Nov. 30, representing 3.6% of assets.

Nvidia has been an investor and partner in the company for several years. Companies that have gone public via SPAC merger or IPO, and later disclose Nvidia as an investor, have seen shares rise with increased investor interest.

Databricks raised $500 million in funding in September 2023 with the company valued at $43 billion. T. Rowe Price Group Inc TROW led the investment round.

Other investors in the September funding round included Andreessen Horowitz, Baillie Gifford, ClearBridge Investments, Fidelity Management, Franklin Templeton, Counterpoint Global, Ontario Teachers’ Pension Plan and Capital One Financial Corp COF.

Databricks competes with Snowflake Inc SNOW, which went public at $120 per share in 2020. The company saw shares open at $245 due to huge demand. Snowflake stock is down 11% year-to-date.

Ghodsi hinted that Databricks is focusing on its rivalry with Snowflake to gain new business.

"We had a program called ‘SnowMelt.' We were going after Snowflake and we demonized them, but that's behind us," Ghodsi said at the Axios event. Databricks is also working on competing with larger companies like Salesforce CRM and Microsoft Corporation MSFT according to the report.

Data and AI will be more important in people's lives going forward and Databricks is well-positioned to take advantage of this trend, Ghodsi predicts.

The company expects to hit positive free cash flow for the first time and have a $3 billion revenue run rate for the fiscal year ending Jan. 31.

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