As the data and artificial intelligence fields continue to develop, Databricks has become a company worth paying attention to. Its Lakehouse platform allows companies to access and analyze data more easily, driving its growth. Although it has not yet been listed on the public market, it has already had a certain influence in the industry and attracted the attention of many investors.
As AI technology accelerates, Databricks should have more room for growth in the future. Given its growth potential, many investors may want to invest in the company. Here's how to invest in Databricks and some factors to consider when evaluating the company.
What kind of company is Databricks?
Databricks is an American enterprise software company founded in 2013. Its main business is selling its data processing and machine learning solutions to customers through subscription services. Its core product, Databricks Lakehouse, combines the advantages of data lakes and data warehouses to provide an open and scalable platform that can help enterprises efficiently process analysis and utilize data, and accelerate data-driven decision-making and innovation.
Image source: Databricks official website
Since its establishment, Databricks has completed 14 rounds of financing totaling US$19 billion.
Source: crunchabse official website
Databricks is a company that has made significant progress in the field of data processing and has developed rapidly in the fields of big data and artificial intelligence since its establishment.
Its business has shown strong growth momentum in recent quarters, with year-over-year growth of more than 60% in the third quarter ending October 31, 2024. It is expected that in the fourth quarter ending January 31, 2025, the revenue run rate will exceed US$3 billion and achieve positive free cash flow.
The company has many partners and customers, including AWS, Microsoft Azure, Google Cloud, etc., and its customers include leading companies in multiple industries such as finance, medical care, retail, manufacturing, etc.
Is Databricks IPO?
As of early 2025, Databricks is still not listed on a stock exchange. Investors cannot buy its shares through regular brokerage accounts. The company is cautious about going public and currently has no clear timeline for an initial public offering (IPO).
Looking back, Databricks had the opportunity to go public, but due to changes in the market environment, especially the fluctuations in investors' enthusiasm for IPOs of technology startups, the company chose to wait for a more appropriate time. The uncertainty of the current IPO market still affects its listing decision.
Although Databricks is not a public company, some investors can still buy a stake in its upside potential through an online platform called EquityBee, which is used by many private companies.
How to invest in Databricks?
Although Databricks is not a public company, some investors can still buy an interest in its upside potential through secondary platforms such as EquityBee or ForgeGlobal (FRGE). These online platforms allow accredited investors (i.e., those with high net worth or high income) to invest in venture-backed startups. Here are some ways you might indirectly invest in Databricks.
Specific investment platform
For qualified investors, secondary investment platforms such as EquityBee provide a way to participate in Databricks' growth. These platforms are designed for high net worth or high income investors to invest in venture capital-backed startups. On EquityBee, qualified investors can fund Databricks employee stock options. When the company has a liquidity event such as an acquisition or IPO, investors will receive proceeds from the option sale price in an agreed proportion. Databricks is one of the startups that investors pay more attention to on the platform.
In addition, Fundrise Innovation Fund also provides investors with access to Databricks. The fund is open to all investors and has a low minimum investment amount of about $10 per share. Its investment portfolio includes pre-IPO companies such as Databricks, as well as companies such as Canva, Anyscale, Anthropic and OpenAI. By investing in this fund, investors can indirectly share in Databricks' future growth benefits.
Alternative investment options
For investors who do not meet the investment requirements of professional platforms but want to lay out in the data field before Databricks goes public, investing in its listed competitors is a viable option.
Snowflake (SNOW) is one of the important choices. Snowflake's data cloud platform is highly competitive in the market. Compared with traditional solutions, it can provide customers with more efficient, convenient and flexible data management services. It is widely used among enterprise customers and its business is growing.
MongoDB (MDB) cannot be ignored. As a document database, MongoDB is flexible and allows customers to build applications without complex configurations. It is popular among developers and enterprise users, and its market share is gradually expanding.
ETFs Related to Databricks
It's not currently possible to invest directly in Databricks stock through an exchange-traded fund (ETF), but you can capture relevant market trends with the help of specific ETFs.
The SpearAlpha ETF (NYSEMKT: SPRX) invests in companies that benefit from disruptive technology trends such as artificial intelligence. Its holdings include Snowflake and Nvidia , which is an investor in Databricks. Investing in this ETF can indirectly expose you to market dynamics related to Databricks, and its expense ratio is 0.75%.
TrueShares Technology, Artificial Intelligence and Deep Learning ETF (LRNZ) focuses on investing in companies with innovative artificial intelligence and deep learning solutions, with Snowflake and Nvidia as its important holdings. Investing in this ETF can participate in the artificial intelligence investment theme, diversify risks and obtain the returns of the industry in which Databricks is located, with an expense ratio of 0.69%.
Should You Invest in Databricks?
While most investors can’t invest in Databricks just yet, here are some factors to consider before investing in the company if it IPOs.
Profitability
Since Databricks is not listed, there is no need to disclose profit information. There is currently no detailed profit data. According to related reports, Databricks may not yet be profitable. Although its revenue has grown rapidly, such as the substantial growth in annual recurring revenue (ARR) in the past year, in order to expand its business and innovate technology, the company has invested heavily in research and development, market expansion, etc., which has affected profitability. If revenue continues to grow, it is expected to be profitable in the future.
revenue growth
Databricks revenue growth is strong. Its annual recurring revenue (ARR) has grown significantly over the past few years. In 2023, the ARR run rate will exceed US$1.6 billion, a year-on-year increase of 50%. On the one hand, the growth momentum comes from the increasing market demand for data processing and analysis services, especially the demand for data management in artificial intelligence application scenarios; on the other hand, the company has signed cooperation agreements with a number of technology companies, such as generative AI start-ups. MosaicML signs sales contract of US$1.3 billion, laying the foundation for revenue growth. Revenue is expected to continue to grow in the future .
Company Valuation
In the financing in September 2023, Databricks raised $500 million and its valuation reached $43 billion, which is higher than that in 2021. This reflects the market's recognition of it, but the high valuation also means high risk and high return expectations. Investors need to combine its business growth prospects, competitive advantages and industry trends to evaluate the rationality of the valuation before making investment decisions.
Conclusion
Databricks has a certain position in the field of data processing and artificial intelligence. Its Lakehouse platform has driven revenue growth and aroused expectations for its listing. Investors need to carefully evaluate and make comprehensive decisions when making decisions, use existing investment platforms and alternative strategies, pay attention to changes in key indicators, make plans in combination with investment tools, pay attention to investment opportunities of competitors, and make appropriate decisions after weighing risks and benefits.
