‘It’s dumb to IPO this year’: Databricks CEO explains why he’s waiting to go public

Databricks recently closed one of the largest funding rounds ever, raising $10 billion in new funding. Naturally, tech investors were quick to ask what this meant for the company’s much-anticipated IPO. During an event in San Francisco on Tuesday night, Databricks CEO Ali Ghodsi explained why he is waiting until at least 2025 to go public.

“This year was an election year. We wanted to find stability – people are worried about interest rates, inflation… So we said, look, it’s dumb on the IPO this year, so we’ll definitely wait,” said Ghodsi during an interview with Dan Primack during Axios AI. The conference. “The first opportunity for an IPO will be next year, and then there will be closing periods, so it will be a very long time for the employees to get the money.”

Databricks is using this “Series J” to allow early adopters to cash out and continue to grow. While the year 2024 was uncertain in many ways, the IPOs of ServiceTitan, Reddit, and other companies were very successful.

But why take the risk if you can’t raise as much money as Databricks?

Ghodsi said that this latest round could have been almost twice as much as the one that was just closed. We knew investors were clamoring to get in, but the craze caused Databricks to raise its share price. The data analytics company has started trying to raise $3 billion to $4 billion in this round, according to Ghodsi, but he says media reports about their fundraising efforts have driven interest through the roof.

“I saw this Excel sheet where they keep the statistics of all the people who want to invest. It was an interest of $19 billion, I almost fell off my chair,” said Ghodsi. “And we haven’t even talked to everyone yet. I was like, ‘Oh my God, that’s a lot.’ So we increased the price.”

Even after the impressive fundraising, Ghodsi is not releasing the Databricks IPO in 2025. However, he said it could be 2026 again. He said it is not very important to go public as it was 10 to 15 years ago, as this record-breaking round indicates, but it is still something the company wants to do. That said, Ghodsi isn’t trying to squeeze in an IPO before the “AI bubble,” as he calls it, bursts.

“I mean, it’s the ultimate AI bubble. It doesn’t take a genius to know that a five-person company with no product, no innovation, no IP – just recent grads – [is not] they cost hundreds of millions, sometimes millions,” said Ghodsi. “You’re getting billions of dollars worth of these startups from scratch — that’s a bubble.”

The Databricks CEO didn’t specify which startups he was talking about, but we’ve certainly seen a lot of AI unicorns this year. None of this seems to bother Ghodsi, however, who says his company and its valuation will stand the test of time. He thinks his company has already won its first major battle with another data analytics startup, Snowflake.

“We had a program called ‘SnowMelt,'” Ghodsi said, confirming reports of a program within Databricks to steal business from Snowflake. “We were after Snowflake and demonized them, but that’s behind us.”

That effort to demonize Snowflake came at a cheap price, reportedly causing Databricks to pay $2 billion to acquire a small startup called Tabular. Snowflake reportedly wanted to buy Tabular, even though the company was only doing $1 million in annual recurring revenue at the time.

Now, Databricks is chasing bigger rivals with products that compete with enterprise giants like Salesforce and Microsoft. Ghodsi says data and AI will continue to play a more important role in people’s lives every year, and he thinks his company is well-positioned to fill that niche.