Insight VC describes Databricks’ wild $10 billion deal and the bad advice its CEO ignored

It’s been a wild week for investors heading into Databricks’ record-breaking $10 billion fundraising, one of the VCs leading the deal told TechCrunch.

“There were calls that went well late into the night, and that’s how good opportunities arise,” described George Mathew, managing director of Insight Partners with a smile. Along with new investor Thrive, Joshua Kushner’s firm, Insight was one of six firms leading the deal. All but Thrive were existing investors.

“Even though we were already investors at the cap table, we worked to make sure we could be co-leaders,” Mathew said. Insight first invested in Databricks in 2021. But in order to enter into this huge deal, Insight had to enter Insight Partners Public Equities, a fund created to buy public shares under the leadership of managing director John Wolff.

There was so much interest that allocations and valuations grew rapidly. As of mid-November, the deal was worth nearly $8 billion. This was reported by Reuters time. A few days later, it was $9.5 billion worth $60 billion, and on Tuesday, It was closed at $10 billion at $62 billion evaluation.

For perspective, it’s bigger OpenAI raises $6.6 billion in Octoberthe greatest adventure tour of all time.

“There was a lot of institutional demand and interest for a generational company,” Mathew said. “I’ve been an investor in Insight for the past four years on all things data, AI, ML. This is what I live for.”

The investment involved a massive secondary public offering in which Databricks employees or other existing investors could sell shares. New preference shares were issued to the new investor. Databricks didn’t specify how much of the increase was secondary, other than to call the $10 billion “non-dilutive,” which means a good chunk.

Interestingly, Databricks, founded in 2013, could have been a tragic story. Ten years ago, its founders created Spark technology, the key to yesterday’s “big data” trend. Spark has helped enterprises analyze their internal big data very quickly.

With the growth of data hosted in the cloud, the company was processing the data and then handing it over to other players. It could slowly fall into an insignificant big data feature.

Databricks co-founder and CEO Ali Ghodsi (pictured) sought advice from Mathew, who ran big data company Alteryx as COO before becoming a VC. The two have been friends since the early days of Databricks.

“A few years ago, Ali called me and said, ‘Hey, I’m thinking about getting into the data warehouse market.’ I just said it’s the dumbest idea I’ve ever heard. I couldn’t have been more wrong,” Matthew laughs, adding that he’s glad Godsey didn’t listen to him and hold his bad advice against him.

At the time, traditional data warehouse vendors, which store large amounts of enterprise data used for analytics, also struggled against rising cloud stars like Snowflake and products owned by cloud vendors like AWS Redshift.

But at the end of 2020 Databricks launched anyway its data warehouse product – Databricks SQL – and quickly became Snowflake’s big competitor.

Then came large language models (LLMs) with a constant thirst for high-quality enterprise data. “Where does this high-quality data come from? For the enterprise, it will come from somewhere like Databricks,” Matthew said.

Flash forward to the end of 2024, the IPO market is still closed and investors are eager to acquire AI infrastructure products such as data warehouses that can serve LLMs.

says Databricks by the end of the fourth fiscal quarter, it will reach $3 billion in revenue, up 150% year-over-year, with $600 million in revenue for Databricks SQL.