The 2022 IPO I'm Most Excited About

If you are interested in IPOs and startups of the future, I write about such things on IPO Times, a new Newsletter on substack.

https://ipotimes.substack.com/p/coming-soon

The future of software is A.I. in the Cloud

The IPO of 2022 I’m most anticipating has to be Databricks. The company has?$3.5 Billion?in funding to date according to Crunch Base.

Databricks is an American enterprise software company founded by the creators of Apache Spark. The company has also created Delta Lake, MLflow and Koalas, open source projects that span data engineering, data science and machine learning.

From data warehousing to machine learning, Databricks is considered an industry leader. This is their?website.?Databricks is credit with pioneering the idea of “lakehouse” architecture in the cloud. This combined data “lakes,” large amounts of raw data, with “warehouses,” organized structures of processed data.

I like their business model and how A.I centric it appears to be. They essentially make open source and commercial products for processing structured and unstructured data in one location, views its market as a new technology category. Databricks calls the technology a data “lakehouse,” a mashup of data lake and data warehouse.

Databricks, which ranked 37th on CNBC’s 2021 Disruptor 50 list, said in August that it was generating $600 million in annual recurring revenue, up 75% year over year. That’s like the Snowflake of 2022. Snowflake was the biggest software IPO ever in 2020.

I don’t know much about it personally but for context, since the 1980s, large companies have stored massive amounts of structured data in data warehouses. More recently, companies like Snowflake and Databricks have provided a similar solution for?unstructured data called a data lake.

Only companies such as ByteDance, Stripe or Klarna going IPO can excite me as much as Databricks.

As of September, 2021 Databricks was worth around $38 billion following its latest fundraise of $1.6 billion in August 2021, led by Counterpoint Global. This valuation came after a fundraise of $1 billion and a $28 billion valuation in February the same year. When it goes IPO it will likely be worth closer to $50 Billion I would assume.

So where are we today? Databricks operates in over?12 countries?worldwide with an international reach of more than 5,000 organizations. Additionally, the company maintains partnerships with more than 450 international firms that provide services on the Databricks Lakehouse Platform.

I like IPOs where the company going public is mature and growing at an impressive rate, the exact opposite of all those SPACs that bombed in 2021. Snowflake’s stock is nearly $300 even after a correction to software valuations. Databricks I think is potentially an even better company.

There’s still much about Databricks’ financial position that we don’t yet know — its gross margin profile, for example. Databricks is a bit mysterious but seems at the intersection of A.I. and B2B in a way few companies are today.

As a private company, Databricks can continue to focus on picking up customers, and right now it’s aiming to reach more businesses in commerce and consumer goods. But it’s inevitable they go IPO in 2022 or 2023 at the latest.

Databricks' first product, the Apache Spark, gained notoriety as a top open-source analytics engine. Even people not in technology have heard of Apache. The company has had nearly ten solid years to grow and evolve.

The company was founded in 2013 by Swedish-Iranian computer scientist Ali Ghodsi, alongside a team of other engineers who had previously worked on Apache Spark at the University of California’s AMPLAB.

The same year saw the company raise $13.9 million in initial funding in an early step towards emerging from stealth mode, and 2014’s $33 million Series B round allowed the company to make key hires and roll out new product, Databricks Cloud. The Cloud and A.I. intersect at a very important point.

Databricks is a data-and-AI focused company that interacts with corporate information stored in the public cloud. It’s a likely acquisition target for someone like Salesforce I believe. Databricks also raised part of the capital from major cloud vendors including AWS, Alphabet via its CapitalG vehicle, and Salesforce Ventures. Microsoft is a previous investor, and it took part in the February, 2021 around as well and it has in total over 40 investors.

If you are interested in IPOs and startups of the future, I write about such things on IPO Times, a new Newsletter on substack.

https://ipotimes.substack.com/p/coming-soon

Thanks for reading!