John Tompkins’ Post

Some quick thoughts and notes while reading through the Cerebras S-1, with Aman Kabeer Themes: * The chip wars * Timing is everything? * The return of the small IPO? * Growth vs profitability * Hardware vs software * Revenue concentration

Who says you need an IPO to get rich on all those stock options in your SaaS unicorn?! Not the WSJ apparently! They have a story out today about private secondary sales for unicorns. But beware the overhype! First, let’s explain what’s been going on… In these transactions, new investors acquire shares from employees (or ex-employees), early investors, etc. According to the article it’s been a gold rush for folks. And to be sure there’s absolutely more activity on this front recently! The article cites ~100 such transactions this year on Nasdaq Private Market — one of the main facilitators — up considerably. And of course we’re all reading about some of the most awe-inspiring — from highly successful companies like Stripe, OpenAI and Databricks. Not to mention a host of companies most haven’t heard of — like Tricentis and Veeam Software just announced in the past two weeks. Meanwhile, as we all know too well, traditional IPO volume is down considerably — from $150B in 2021 to just $31B so far this year. But alas, like many puff pieces about the super star companies — for the average unicorn, IMHO these stories are “wishful thinking”. There are some 1,200+ unicorns out there. Many priced their last deals — and their stock options — during the heady days of ZIRP. And for most of those — the options are underwater. Likely permanently. That means they won’t be doing these glitzy secondary transactions any time soon. Or if they do, they won’t be glitzy and the only ones getting liquidity will be the investors with preferred stock. Not the current or ex- employees! I don’t enjoy raining on anybody’s parade here… But false hope is not healthy.

Monday's slowdown was a blip - yesterday, there were nine deals for almost $9B, with Databricks $8.6B Series J - at a $62B valuation - at the top of the list. Databricks has been working on this round since early in the year. Originally targeted at $4B - $5B, demand was so high that the size of the round kept growing until they decided to cap it off at $10B (even though they had as much as $19B in demand). The entire round is non-dilutive, with employees and early investors selling some or all of their stakes to new investors eager to get in, even at the (much) higher valuation.   https://lnkd.in/eqC_mi6K

Databricks has secured a $10 billion funding round at a $62 billion valuation, led by Thrive Capital, with participation from Andreessen Horowitz, DST Global, GIC, Insight Partners & more! 🚀💪 Accompanied by some super exciting expectation annoucements, including: 📈 60%+ YoY growth 💰 $3.0B+ revenue run-rate ➕ Free cash flow positive this QTR 🚀 >500 companies consuming >$1M/year The investment will power Databricks' continued development of new AI products, acquisitions & international expansion, helping customer accelerate value from their data! #databricks #dataintelligence #lakehouse #scale #growth #investment #funding #preipo #generativeai #ai #data

Pre-IPO Stock Market Update | as of Sep 27, 2024 • Page 2: AG Dillon Pre-IPO Stock Venture Capital Fund closing to new investors on Oct 1, 2024 • Page 3-5: LAST CALL for AG Dillon Top 10 Index Fund, OpenAI, xAI, Groq, Hugging Face, and Databricks Pre-IPO Stock Funds, wires due on Oct 15; Anthropic targets $30-40B; Wiz share sale at $15-20B; Revolut hits $45B; Chime preps 2025 IPO; Scale AI hits $400M H1 2024; OpenAI valued at $156.5B; Google expands Gemini; Rippling launches AI Talent Signal at $15.9B; Anduril Industries secures $17.4B defense deals; Klarna expands BNPL with Adyen • Page 6: This Week in Pre-IPO Stocks Podcast • Page 7: AG Dillon Pre-IPO Stock Vintage Index update • Page 8: Current pre-IPO stock secondary market implied valuations • Page 9-10: Pre-IPO Stock revenue multiples • Page 11: Pre-IPO stock secondary market performance

Series J. $10B raised. $62B valuation. 🚀🚀🚀 Not every day you see a company hit Series J – that’s rare air. But here we are. Databricks just secured $10 billion in fresh funding, pushing our valuation to $62 billion. This $10B investment validates the transformative power of AI and data – and our vision to enable companies to unlock it at scale. It’s a great day to be part of Team Databricks! https://lnkd.in/gTdsPpWV

Think it's too late to invest in tech? Having invested since the early 2000's I've found that picking quality companies when they are oversold (cheap) gives me a better chance to profit over the long term. Here are three tech companies that fit the bill. #techstocks #investing #stocks

Some interesting data from Tomasz Tunguz on US listed technology-based company IPOs and the size of the company’s revenues required. Back in the late 1990’s in the first technology boom period, we used to say you need at least $20mm in revenues (many had zero revenues but plenty of eyeballs). In the decade starting around 2011, we used to say around $100mm in revenues for a SaaS revenue business which would imply an average market capitalization of around $500-700mm. Now, the data is now suggesting closer to $200mm in revenues for a SaaS revenue business implying an average market capitalization of $1-1.4bb (outliers could attract around $2bb in valuation if growth continues to be very robust). There are a few reasons why: 1. Many CEOs just do not want the scrutiny and compliance of being a public company; 2. The costs to go public and remain public are high relatively speaking; 3. There is a lot of dry powder sitting on the sidelines in private equity/venture capital land; and 4. Most troubling, private market valuations continue, on average, to be ahead of public market valuations.

🚀 Databricks' massive $10B raise showcases the evolving tech funding landscape! The AI/data giant's 60% YoY growth to $3B revenue demonstrates huge market appetite, but also highlights interesting trends in tech financing 🤔. While the $62B valuation turns heads 💰, it reflects both investor confidence and a shift in how unicorns approach public markets. CEO Ali Ghodsi's focus on employee liquidity and AI talent acquisition (especially competing with OpenAI/Anthropic 🤖) makes sense, but raises eyebrows about private market dependency and the "grow now, profit later" playbook. The delayed IPO timeline 📈 suggests we might be seeing a new normal in tech company trajectories - where private mega-rounds replace traditional public market transitions. Question is: will this strategy pay off in the long run? 🎲 #️⃣Databricks #️⃣AI #️⃣Data_Science #️⃣Investment #️⃣Unicorns