May 28, 2024

Young money

Hi there, 

Databricks’ revenue grew to $1.6B for the fiscal year ending in January 2024 — up over 50% YoY. 

The data management company is using its cash-rich position to invest in a growing network of AI startups. 

Its VC arm, Databricks Ventures, is on pace to back more deals this year than it has either of the past 2 years.

In 2024 YTD, Databricks Ventures has invested in the following companies: 

• Unstructured (Series B) - Data transformation for LLMs
• Adaptive ML (Seed) - GenAI development platform
• Mistral AI (Series A) - Open-source LLM developer
• Entrada (Seed) - Databricks consultancy
• Glean (Series D) - AI-powered enterprise search
• XponentL Data (Seed) - Data & AI consultancy
• Anomalo (Series B) - Data quality monitoring

Now, the firm is cementing its focus on AI with its second fund — the Databricks AI Fund — announced last week. 

With its new fund, Databricks Ventures will look to back “early- to growth-stage startups” building AI applications on top of or alongside the Databricks platform.

Competitor Snowflake by comparison has backed 9 companies so far this year, with a focus on AI as well, as CB Insights customers can see here. Interestingly, Snowflake and Databricks have backed 6 of the same companies, including Mistral AI.

Prime targets

Based on Databricks Ventures’ investment thesis, we’ve put together a list of 82 potential investment targets for the Databricks investment team(s). 

These companies: 

• Are seed or Series A stage
• Focus on AI and data-related applications
• Have Commercial Maturity scores of 2 (Validating) or 3 (Deploying)
• Are in the top 10% of Mosaic Scores (indicator of a startup’s potential) 

Databricks Ventures also tends to invest alongside leading VCs like Sequoia Capital and a16z, so this list features companies backed by CB Insights Smart Money investors. 

The list includes:

• Voltron Data (Series A) - Data management
• Langfuse (Seed) - Open-source observability for LLM applications
• Contextual AI (Seed) - Enterprise-focused models
• Predibase (Series A) - AI developer platform

CB Insights customers can see all 82 here. 

One common theme among its past investments (like Mistral AI) and the targets above is open-source products — a long-time focus for the company. 

In genAI, Databricks is betting that businesses will move away from closed-source models — like those developed by OpenAI — toward open-source ones that could allow for greater customization and observability.

Databricks will likely continue to integrate more open-source projects and capabilities in the coming months. 

Just in March, for example, it acquired open-source data curation platform Lilac.

M&A 

On that note, beyond investing, Databricks is also deploying cash into acquisitions.

While the fund isn’t explicitly focused on developing Databricks’ M&A pipeline, Databricks recently acquired one company previously backed by the VC arm: data integration platform Arcion.

Broadly, Databricks is using acquisitions to build a one-stop shop for enterprises' AI needs. 

For instance, its largest acquisition to date was MosaicML for $1.3B. The generative AI startup aims to help enterprises develop and deploy LLMs.

This Databricks customer ($2M annual spend) we recently spoke with, who became a customer of MosaicML post-acquisition, intends to replace Google’s Contact Center AI with its own model developed with Mosaic. 

CB Insights customers can see how Databricks is building its one-stop shop for AI development in our strategy map here.

I love you.

Anand

@asanwal 

P.S. Tune in to our midyear tech outlook on June 13. CBI analysts will be speaking on the tech activity they’re tracking heading into 2025. Register here. 

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