IPO inevitable for Databricks after adding $5B in funding

Databricks is different

Databricks is far from the only data management vendor that has expanded over the past few years to provide a data foundation for AI development.

Rival Snowflake and hyperscale cloud providers AWS, Google Cloud and Microsoft have all similarly added capabilities that enable customers to connect AI tools with proprietary data. In addition, database vendors such as MongoDB and Couchbase, niche specialists including Alation and Informatica, and analytics providers such as Qlik and Tableau have all added tools to enable AI development informed by relevant, high-quality data.

The value in an IPO would go beyond the cash raised, enabling Databricks to move from a successful private platform to a consolidator and long-term standard for the enterprise AI stack.

Databricks' valuation of $190 billion, however, dwarfs Snowflake's market capitalization of $114 billion, despite Snowflake's stock price more than doubling since April. And while Databricks continues to raise billions of dollars with each funding round, vendors such as Confluent, Domo, Dremio, DBT Labs and Fivetran have either sought buyers or merged with peers with funding difficult for data and analytics vendors to raise since tech stocks plummeted in 2022.

Venture capitalists simply view Databricks differently than they view most other data and AI providers, according to Sanjeev Mohan, founder and principal of analyst firm SanjMo.

"Investors see Databricks becoming the single consolidated platform for a wide span of data and AI use cases," he told TechTarget. "Databricks is different in that it actually keeps absorbing adjacent categories onto one architecture rather than bolting on a feature and calling it a platform."

In addition, venture capitalists have faith in Databricks CEO Ali Ghodsi, Mohan continued.

"Investors find their CEO to be a force of nature who has tremendous ambition and grit to build out the platform," he said.

One of those investors is Benjamin Black, co-founder and managing director of Akkadian Ventures, which holds exposure to Databricks through Powerlaw Corp.

Numerous factors have led investors to flock to Databricks while only minimally funding some of its smaller competitors, according to Black. In particular, he noted that its execution at scale -- surpassing $7 billion in annual recurring revenue and year-over-year revenue growth of approximately 80% -- are significant factors in the venture capital community's continued interest in Databricks.

"Databricks is popular because it has demonstrated unusually strong execution at enormous scale just as enterprises are trying to turn AI from a promising experiment into a core business capability," Black said.

Strong growth at scale and technology execution -- a platform designed to enable users to successfully develop AI tools -- makes Databricks not merely a company investors want as part of their portfolio, but one they want to get in on early, he continued.

"It has the revenue, growth, and institutional maturity to list when it chooses," Black said. "That combination is precisely why investors want exposure now rather than waiting for a ticker symbol.

Beyond how investors view Databricks, which is as much a bet on growth potential and financial performance than a recognition of technological prowess, Databricks has distinguished itself from a technological perspective as well, according to David Menninger, an analyst at ISG Software Research.

Significant features Databricks has developed over the past few years include Unity Catalog for governing data and AI, Mosaic AI for developing generative and agentic AI, Lakebase to provide a PostgreSQL database foundation for AI initiatives, Agent Bricks to automate aspects of AI development, and its Genie natural language interface.

"Databricks has executed well," Menninger said. "Investors are primarily interested in high-growth companies. Databricks has been growing rapidly for many years."

ISG groups Databricks with 12 other data and AI platform providers, he continued. Peers include fellow data platform providers Cloudera, Snowflake and Teradata, hyperscale cloud vendors AWS, Google Cloud and Microsoft, and other broad-based technology providers such as IBM, Oracle and SAP.

"We rate Databricks as an overall leader among this group, which means we place them in the top three," Menninger said.

Private vs. public

In theory, Databricks could stay private for the foreseeable future.

"Databricks has had virtually no financial reason to face the public markets because the private markets are treating them so favorably," William McKnight, president of McKnight Consulting, told TechTarget.

Similarly, Mohan noted that private investors have been so willing to keep Databricks flush with cash that the vendor has the luxury of waiting until the ideal time to explore an IPO.

"The private market has given Databricks everything an IPO would, without the constraints," he told TechTarget.

Private secondary sales only stretch so far. A public market lets employees and early backers actually cash out, unlike private market. That is good for employee retention and morale.

Eventually, however, the benefits of going public outweigh those of remaining private, Mohan continued.

For example, each private funding round dilutes the value that existing investors hold in Databricks. In addition, public companies have the transparency and credibility that can attract large enterprise and government customers.

"Private secondary sales only stretch so far," Mohan said. "A public market lets employees and early backers actually cash out, unlike the private market. That is good for employee retention and morale."

McKnight likewise noted that the benefits of going public ultimately outweigh those of continuing to raise private capital. Specifically, he noted that an IPO would enable Databricks to have access to liquid, market-validated funds for future acquisitions, stock to attract and retain elite talent, access to cheap debt and secondary capital markets, and SEC-audited transparency.

"Even with unlimited private capital, going public provides advantages that private funding cannot replicate," McKnight told TechTarget.

That said, raising more private funding remains a possibility for Databricks.

Black noted that a company such as Databricks can theoretically remain private indefinitely, as long as it can continue to raise capital, its employees and early investors can get liquidity without the company going public, and it can demonstrate its financial health without public filings.

"Private capital has gotten deep enough, with the largest funds able to write enormous checks, that a company can keep raising privately for a long time without ever needing the public markets," Black said.

In fact, it's possible that Databricks and other companies,such as Stripe, that are able to raise massive amounts of funding, could create a new class of "forever private" companies, he continued.

"Databricks and Stripe get all primary and secondary liquidity they need in the private markets," he said, noting that they can innovate without having to meet the expectations of public markets and each has already made the type of acquisitions that public stock is often used to fund. "If the private markets stay so accommodating for the best mega-privates, why go public at all?"

Menninger likewise noted that Databricks -- in theory -- could keep raising funding and remain private. He pointed out that IPOs typically fund expansion, and Databricks has been able to expand by making numerous acquisitions and investing in product development.

"If you have access to the capital you need, it’s much better not to have to face the quarterly scrutiny of the public markets. It can really distract from the day-to-day operations of the business," Menninger said.

However, the greater likelihood is that Databricks will eventually go public, he continued, noting that benefits such as the public disclosure of financials attracting new customers, equity given to employees having more value when a company is public, and more easily funded acquisitions could outweigh the benefits of remaining private.

"Investors need to be able liquidate their investments at some point," Menninger said. "As long as there are other investors willing to step in, they can potentially go on like this forever, but that's highly unlikely. Even if they reach the point where they don't need additional capital, the existing investors will want to be able to close out their positions."

If not now, when?

Databricks will eventually go public, according to Ghodsi.

"We will go public, I promise," he said during an interview with CNBC on Thursday following the closing of Databricks' $5 billion funding round.

But the timing for an IPO has to be right, Ghodsi emphasized.

Ali Ghodsi

The stock market, though there have been significant IPOs in 2026, has been volatile, trending generally up but lurching more in response to economic indicators, major companies' earnings filings and other reports.

"The markets have been really wobbly," Ghodsi told CNBC. "For three months, everything is down and it's going to be terrible. And then the other day, it's amazing. There was one great [announcement] by one software company and the whole market is up 10%, and then the next day everything is down 10%. It's just very turbulent times."

Beyond market unpredictability, the final months of 2026 may not be a good time for Databricks to go public because other major tech companies are also planning to go public and a Databricks IPO could get overshadowed.

Already in 2026, SpaceX pulled off the largest IPO in history when it raised $75 billion. Just as Databricks was announcing its latest funding round, reports surfaced that Anthropic may be planning an IPO in October that could surpass SpaceX's. In addition, OpenAI has already filed initial paperwork for an IPO.

Those IPOs could take both potential investors and the infrastructure required to go public -- the investment firms that manage such undertakings -- away from Databricks. 

"Ghodsi has been open that he views this as a poor year to go public with SpaceX, OpenAI, and Anthropic all crowding the IPO conversation, and he's pointed to a possible window in 2027," Mohan said.

One thing Databricks does not have to worry about is missing its opportunity to go public, which happened to numerous data management and analytics providers in 2022.

Vendors including Qlik, ThoughtSpot and Pyramid Analytics spoke openly about IPOs, with Qlik even filing its initial paperwork. But after tech stocks plummeted in the spring of 2022, the technology landscape changed toward the end of the year, with AI becoming the dominant focus. Since then, niche data management and analytics vendors have had to reposition themselves and have largely lost the favor of the investment community.

Qlik, ThoughtSpot and Pyramid remain private. 

"Databricks is delaying because public markets are already giving it public company resources without public company constraints," Ni said. "Databricks is using the financial flexibility to drive growth rather than prove quarterly predictability. An IPO will become more necessary when the need for employee liquidity, acquisition currency and public market permanence outweighs the benefits of flexibility."

The outlook

While an IPO is all but inevitable, and before going public Databricks remains able to attract large amounts of funding to fuel seemingly any growth initiative, technology needs to remain the vendor's main priority, according to McKnight.

"My focus, and my clients' focus, is less on the financial headlines and much more on the core architectural and product execution they deliver to the enterprise," he said.

For example, the high cost of AI development is an ongoing concern for many enterprises, in some cases preventing companies from building agents and other applications. In addition, navigating Databricks to develop data and AI products can be complicated. Meanwhile, after acquiring a spate of companies -- including its purchase of PostgreSQL database innovator ElectricSQL this week -- there are still tools that need to be integrated with Databricks' existing platform before customers can take full advantage.

"They could neutralize cost opacity, deliver a true zero-administration experience, provide prebuilt AI templates within Agent Bricks and see about integrating [acquisitions such as] PostgreSQL Lakebase (Neon) and Tabular under Unity Catalog," McKnight said, noting that some competitors deliver faster execution and lower costs across customers data estates.

"Additionally, Databricks suffers from severe competitive multi-year ingestion pipeline degradation and critical autoscaling endpoint failures under real-time concurrent inference," he added.

Mohan similarly suggested that while a well-timed IPO rather than another funding round is essential, so is ensuring that the many new features Databricks has developed and acquired work as intended, and do so in an integrated manner that enables customers to build the data and AI tools they desire.

"Proof that their expansion is actually working," he said when asked what he'd like to see from Databricks over then next year. "There is no guarantee that their forays into marketing and security -- or even Lakebase -- will appeal to buyers who may be reluctant to put all their eggs in one basket. I'd like to see them prove these expansions merge into one coherent product rather than a widening surface."

Eric Avidon is a senior news writer for Informa TechTarget and a journalist with more than three decades of experience. He covers analytics and data management.