How to invest in Databricks?

• Databricks is a platform for building, sharing, and maintaining enterprise-level data, analytics, and AI solutions at scale.
• Investors, even if Databricks isn’t publicly traded, can engage in its growth through platforms like EquityBee or Forge Global.

This article will introduce the introduction, ways of investment and alternative options of investments in Databricks. See also: Bosch, Qualcomm deepen ADAS software partnership.

Introduction of Databricks

Databricks is a platform for building, sharing, and maintaining enterprise-level data, analytics, and AI solutions at scale.

Products

Databricks offers a series of products, which all integrate. It also deploys cloud infrastructure on behalf of its clients.

• Spark: The company’s core service is a web-based platform where data scientists can write queries in SQL, Python, and other languages to perform data analysis.
• MosaicML: Acquired in June 2023 for $1.3 billion, MosaicML is used for training large language models (LLMs) and generating images.
• MLFlow: Here, data scientists can develop machine learning (ML) models, track their experiments, deploy them for production use, and monitor their performance.

Revenue

Databricks achieved an annual revenue run rate of $1.5 billion by the end of July, marking a 50% year-over-year sales growth. Based on its current trajectory, I project it will approach a $2 billion annual run rate by the end of 2023. Furthermore, the company concluded the quarter with over 10,000 customers globally, including 300 customers generating more than $1 million in annual revenue.

Profitability

Despite substantial revenue growth in recent years, Databricks is unlikely to be profitable. The company expanded its workforce from 3,500 to 6,000 employees over the past two years, which has significantly impacted its path to profitability.

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How to invest in Databricks

Although Databricks is not publicly traded, investors can still participate in its growth potential through secondary platforms such as EquityBee or Forge Global (NASDAQ: FRGE). These online platforms enable accredited investors—those with high net worth or income—to invest in venture capital-backed startups.

On EquityBee, accredited investors can support employee stock options, earning a portion of the option’s value upon the company’s liquidity event, such as a sale or IPO. Databricks ranks as the third-most sought-after startup on the EquityBee platform. In contrast, the Fundrise Innovation Fund offers exposure to Databricks for all investors, with a minimal investment requirement of approximately $10 per share. The fund allocated $25 million to Databricks, alongside other pre-IPO investments like Canva.

Alternative options to investing in Databricks

Non-accredited investors seeking to capitalise on the rapid growth of the cloud data sector before Databricks’ IPO have alternative investment opportunities. They can invest in a publicly traded database company that competes directly with Databricks. Here are a couple of options to consider:

• Snowflake (SNOW -2.35%): Snowflake’s data cloud platform allows customers to store, process, and analyse data more efficiently and flexibly compared to traditional solutions.
• MongoDB (MDB -2.15%): MongoDB provides a document database that offers a flexible approach, enabling clients to quickly develop applications without extensive database configuration.