Louis Lehot’s Post

Once is an incident, twice is a coincidence, three times is a trend. Databricks is reportedly in talks to raise capital at a $55B+ valuation. Use of proceeds? At least partially to buy out employee restricted stock units (RSUs) and fund the associated tax obligations. How is this relevant to a budding trend in private markets? You should read Cory Weinberg at The Information's piece (link below). He highlights that by providing RSU holders an opportunity to sell before IPO, Databricks is following Stripe's example from 2023. Why is this a big deal? It is not typical for private companies to provide liquidity to RSU holders prior to IPO. And yet now 2 super notable pre-IPO companies have done it in short order. What are RSUs and why aren't they usually sold pre-IPO? - An RSU gives an employee the right to receive stock after certain restrictions are met. RSUs are not shares. - For private companies, RSUs typically have a double-trigger structure: vesting plus a liquidity event, meaning actual shares are distributed when the company goes public or is acquired. - This prevents the creation of immediate tax obligations for both the company and employee when the value of the company's stock increases, protecting private company employees from having to pay taxes on shares they don't yet own & can't sell. - Allowing RSU holders to sell pre-IPO **could** burst the liquidity trigger for the entire plan, forcing other employees & the company into taxes even if they weren't party to the sale! That's why RSUs are typically not sold pre-IPO! So how did Databricks and Stripe manage to get their RSU holders pre-IPO liquidity and preserve their 2-triggers? Short answer: they probably got an exemption. A one-time exemption can go a long way. Look what it afforded these companies: 1. Allowed RSU holders who have been at the company since 2019 a chance to realize some value. Caplight has Databricks shares up ~20% YTD, I expect the liquidity event will be well received by all employees. 2. Prevented RSUs from expiring completely worthless. Most RSUs have 7yr expiration windows, no joy when that clock strikes midnight. 3. Allows the company to focus on its core mission instead of being forced to go public when it doesn't want to or isn't ready yet. There are plenty of Decacorns who issued RSUs 5+ yrs ago who aren't ready to go public. Have Stripe and Databricks found a new playbook for resetting the clock? And if so, which company do you think makes this a trend? #venturecapital #IPO #preIPO #secondaries #RSU #liquidity #privatemarkets https://lnkd.in/g4_srWaJ

Breaking records! 🚀 Databricks secures $5 billion in funding, skyrocketing its valuation to $55 billion. This move aims to enhance employee liquidity and fuel innovation in the data-driven world. 💡📊 Databricks Raises $5 Billion in Funding Round Valued at $55 Billion to Provide Employee Liquidity View full news : https://bit.ly/3Z47eqi #Databricks #FundingRound #TechInnovation #DataAnalytics #Valuation #TechNews #BusinessGrowth #EmployeeBenefits

Conventional wisdom is that Databricks missed an opportunity with the pre-pandemic IPO bubble. It could be argued either way: (1) Venture investors missed cashing out at sublime levels; or (2) Databricks maintained sustainable growth in spite of surging interest rates, and consequently, when market conditions become IPO friendlier, it should be inoculated from the threat of being too ridiculously priced. The good news is one of continued sustainable growth. Or as Thomas W. Dinsmore termed it yesterday, a common sense approach to building its platform from the bottom up rather than some grand strategery from the top down.

Databricks, the data analytics platform, is taking a unique approach to going public. Instead of an IPO, the company is self-reporting its business performance while it waits for the right moment to commit. According to Ali Ghodsi, Databricks' CEO, the company is taking this alternative path to becoming a public firm. Stay tuned for more updates on this innovative strategy! #Databricks #IPO #BusinessPerformance #DataAnalytics

Is there any good reason for Databricks to IPO? Databricks has traded very actively in the secondary market for a range of reasons. It's a well known company in a hot space. Also, the CEO has shared information publicly about the company's performance. Visibility into how a private company is doing helps a lot to generate demand. Databricks is also a rare stock that does not trade directly but trades very actively on an indirect basis (ie. no actual shares change hands, but buyers and sellers use structures like SPVs in order to trade). The significant variations in transacted prices are therefore more the result the range of transaction structures that buyers and sellers employ in transfering interests, rather than a lack of available price discovery. Different structures have different prices, and so do different classes (eg. common vs. RSUs) As Rebecca Szkutak of TechCrunch recently wrote, private companies are increasingly satisfying liquidity needs in the private secondary market. What's more, as we start to get robust price discovery, I believe that the private market will act more like the public markets for companies' PRIMARY fundraising needs. Liquid pricing benchmarks will help companies source investors and set fundraising terms much more easily. All of this begs the question: is there something that Databricks can get from going public that it cannot get as a private company? #privatemarket #secondarymarket #liquidity #fundraising #unicorns #preipo

Big moves in the data analytics and AI space! Thrive Capital is reportedly in talks to acquire a $1B stake in Databricks, valuing the company at $55B. 🚀 Databricks continues its impressive trajectory: Secondary market valuations range from $24B to $53B, influenced by deal structures like cap tables or SPVs. The last funding round in September 2023 valued Databricks at $43B. This upcoming transaction isn’t a new funding round but a share sale (tender offer) led by Thrive Capital. With annualised revenue hit $2.4B (a 26% yoy increase). Databricks is solidifying its role as a leader in analytics and AI innovation. Learn more about Databricks financials: https://lnkd.in/eDDfdT5u #Databricks #preIPO #SecondaryMarket #Secondaries #Investments #PortfolioMonitoring The Sky Cliff Platform serves as a comprehensive portfolio monitoring solution for the Late-Stage Private Equity Market (pre-IPO), offering independent informational services. Please note that Sky Cliff Professionals does not provide investment or tax advice. Potential investors are advised to seek specialized independent tax and financial advice before investing in any alternative investment. Past performance does not guarantee future returns, and investments involve risks to your capital.

Databricks recorded $1.6B in revenue for its fiscal year ended January 31st. The data and AI company is not wasting time deploying some of that cash into acquisitions. It made its second acquisition just this year in March, acquiring Lilac — which simplifies unstructured data evaluation for genAI applications. The bottom line: Databricks is building a one-stop-shop. https://cbi.team/3PLSYyr

SDK is thrilled to host a Fireside Chat with our partner, Databricks, in Vancouver on Thursday, November 21st! We look forward to sharing how major Canadian companies worked with SDK and Databricks to save $500M. Together, we'll discuss real-world insights, lessons learned, and common pitfalls to avoid when optimizing your business with Databricks. #SDKxDatabricks #SDK #DataSpeaksWeListen

Want to earn a **** ton of money? It seems acquisitions are the way. Databricks acquired Tabular (now part of Databricks) for $2 billion dollars. This number has been previously reported but not disclosed, so I'm not 100% sure if it is correct. 🧱 Now this doesn't sound too weird maybe. However, I was quite astonished to hear Tabular only did about $1 million in revenue. I'm trying to figure out how this works, but it must have something to do with intellectual property. ❄ Snowflake also made a bid on Tabular, and apparently they offered $600 million. But that's not all, the agreement between Databricks and Tabular was made official during Snowflakes most recent annual summit. Talk about competitor disrespect 😂 As a freelancer that built a career on Databricks, I feel like its good to be knowledgeable on these topics. I just hope acquisitions like these actually remain sustainable and generate more profit in the long run. #snowflake #databricks