Databricks is close to securing a multibillion funding round at a $55 billion valuation to enable employees to cash out.

• Sources informed CNBC that the data analytics and AI company is currently in the midst of a significant funding round.
• According to sources, Databricks is currently seeking to raise at least $5 billion in cash and has set its new valuation at $55 billion.
• The software company, already a valuable private startup in Silicon Valley, has been viewed as a potential IPO candidate. However, a source tells CNBC that this funding round delays its public debut prospects.

Sources informed CNBC that one of the world's most valuable private tech companies is currently raising billions more in cash and has no immediate plans to go public.

Databricks, a San Francisco-based company, is currently raising at least $5 billion in its latest funding round, with the possibility of raising up to $8 billion. This round could value the company at $55 billion, surpassing the largest round of the year by OpenAI.

The latest funding round for Databricks is intended to assist employees in selling shares, according to a source. This move may alleviate the pressure on employees to cash out, thereby reducing the need for a liquidity event such as an IPO. However, a source stated that Databricks' highly anticipated public debut may still occur in the back half of next year.

In 2013, Databricks was established and offers software that assists enterprises in managing their data and creating their own AI products. The company utilizes machine learning to help clients such as AT&T and Walgreens analyze and comprehend large amounts of data.

This equity round could be the largest in a banner year for artificial intelligence funding. One in three venture dollars this year has gone to an AI startup, according to CB Insights. In 2024, OpenAI broke the record by raising $6.6 billion in October at a $157 valuation.

Databricks raised $500 million at a $43 billion valuation, with investors including Intel, Microsoft, Andreessen Horowitz, Baillie Gifford, Fidelity, Insight Partners, and Tiger Global, among others.

The Information first reported that Databricks was raising money.

The company has seized the opportunity in AI technology by acquiring MosaicML, a $1.3 billion software startup that specializes in large language models that can produce natural-sounding text. According to Databricks, annualized revenue is expected to reach $2.4 billion by the midpoint of 2024.

While its fellow software IPO candidates have taken significant haircuts on valuations, Databricks has grown its value while expanding its employee base. Its decision to stay private comes as software stocks have struggled to get out of a rut brought on by higher interest rates. Shares of rival Snowflake are down 13% this year.

At a conference last week, CEO Ali Ghodsi stated that he prioritizes Databricks' success over the next decade or two, rather than an IPO.

"Ghodsi stated at the Newcomer's Cerebral Valley AI Conference that if we were to go the earliest, it would be mid-next year, or approximately that time. Therefore, it could happen next year."

A Databricks spokesperson declined to comment.