The $10 Billion Round That Was Really an Employee Payday
Published October 25, 2026
Databricks raised $10 billion in December 2024 at a $62 billion valuation, then the largest venture round on record, and Axios reported almost all of the money went to buying shares from employees rather than funding operations. The secondary sale let staff cash in without an IPO, which CEO Ali Ghodsi had ruled out for an election year marked by inflation and rate worries.
In December 2024, Databricks announced a funding round so large that it rewrote the record books for private companies. The data and artificial intelligence firm raised 10 billion dollars in a Series J round that valued it at 62 billion dollars, passing OpenAI's 6.6 billion dollar raise from the previous October, which had been the largest venture round on record. But the headline number hid the real story. Databricks described the round as non-dilutive, meaning it did not water down existing shareholders, and Axios reported that almost all of the 10 billion dollars was going toward buying shares from employees rather than funding the company's operations. For the people who had built the company, it was a payday, not a war chest.
The deal came together at remarkable speed. In mid-November, Reuters reported that the round was on track for around 8 billion dollars. Within days it had grown to 9.5 billion dollars at a 60 billion dollar valuation, and by the time it closed it stood at 10 billion dollars at 62 billion dollars. Six firms led the round, including Insight Partners, which had first invested in Databricks in 2021, and Thrive Capital, a new investor. Demand was so intense that Insight had to draw on a fund it normally uses to buy public stocks just to secure its co-lead position, with its managing director describing calls that ran late into the night.
For employees, the timing mattered as much as the money. The market for initial public offerings was still largely shut, and chief executive Ali Ghodsi had decided against listing in an election year marked by worries about interest rates and inflation, telling Axios it would be unwise to go public that year. A secondary sale solved the dilemma: staff could turn years of paper wealth into real money without the company having to brave the public markets. It was part of a wider shift among the strongest startups, which increasingly used tender offers to give workers liquidity while staying private for longer.
The company had not always looked like a sure thing. Founded in 2013 around Spark, the open-source data-processing technology its founders created, Databricks risked being squeezed as computing moved to the cloud and bigger platforms took over the job of handling data. When Ghodsi told Insight's George Mathew that he wanted to enter the data warehousing market, Mathew replied that it was the worst idea he had ever heard. Ghodsi went ahead anyway, and Mathew later laughed about how wrong he had been.
The gamble paid off in late 2020, when Databricks launched its data warehouse product, Databricks SQL, and quickly became a serious rival to Snowflake. Then the boom in large language models arrived, and those models turned out to be hungry for exactly what Databricks sold: clean, well-organized corporate data. By the end of its 2024 fiscal year, the company said it was on a 3 billion dollar revenue run rate, with Databricks SQL alone at a 600 million dollar run rate, up 150 percent in a year.
The episode marked a change in how startup wealth is made. In an earlier era, employees waited for an IPO to cash in, and many never got there. Databricks showed that when investors are eager enough, a private company can manufacture its own liquidity event, letting workers bank gains while the founders keep control and wait for a better moment to list. The catch is the same force that made it possible: the payday depended entirely on investors' appetite. When that appetite is strong, patience pays. When it cools, the paper wealth stays paper.
The lesson: When investors are eager enough, a private company can manufacture its own liquidity event — but a payday built on appetite is only as solid as the appetite.
Source: original reporting · How we source stories