Good day. Databricks Inc., a nine-year-old data analytics startup, in August surpassed $1 billion in annualized revenue, roughly a year after a $1.6 billion Series H funding round raised its valuation to a staggering $38 billion.

Today, at the opening session of The Wall Street Journal’s virtual CIO Network Summit, I’ll be asking Databricks Chief Ali Ghodsi the question on everyone’s mind: When is Databricks going public?

Last month, Mr. Ghodsi said he had no immediate plans for an IPO, or even another fundraising round, insisting that the San Francisco-based startup had enough capital to ride out a prolonged recession if it had to. Moreover, an economic downturn could prompt enterprise tech chiefs to seek out cost-savings from artificial intelligence and other analytics capabilities—which might drive Databricks’ growth in the year ahead, he said.

There’s little doubt Mr. Ghodsi is facing pressure from the company’s venture investors, some of whom backed Databricks as early as 2013, when it first emerged from the AMPLab of the University of California, Berkeley.

The skid in the public tech market this year has several other high-value startups putting widely expected listings on hold. All told, traditional IPOs had raised only $5.1 billion as of late August this year, compared with more than $100 billion by the same point in 2021, according to Dealogic.

“The slow IPO market is a problem for VC,” says Kyle Stanford, an analyst at PitchBook Data Inc. “It will probably take a couple high-profile companies completing an IPO before much changes on that front.”

Early investors may be antsy to realize returns, instead of holding only paper gains in these companies, including Databricks, he said. But braving an IPO in a volatile market could wipe out even those gains, he added.

“They could go from not being able to realize gains, to the public watching those gains evaporate quickly,” Mr. Stanford said. “Double-edged sword.”

Conor Moore, head of VC practice at KPMG, noted that many VCs likely had lucrative exits last year, “and can now wait a little longer.”

And now on to the news...

Boosting defense tech. Razor’s Edge Management LLC, a venture-capital firm focused on investing in national-security startups, has closed a $340 million fund, the latest example of the increased interest investors and corporations have in backing young companies developing defense-related technology, WSJ Pro’s Marc Vartabedian reports. The Reston, Va.-based firm said it is aiming to deploy the capital into startups helping the U.S. maintain technological superiority over its adversaries. 

• Razor’s Edge said it targets startups developing tech including autonomous systems, space tech, cybersecurity, artificial intelligence and aerospace systems. Some of the companies it backs also can apply their technology to commercial markets.
   
• In July, McLean, Va.-based Booz Allen Hamilton launched a $100 million venture-capital arm to back strategically important technologies in defense and other sectors.

Instacart Inc. doesn’t plan to raise much capital in its initial public offering and instead plans to have most of the listing come from the sale of employees’ shares, said people familiar with its thinking, The Wall Street Journal reports. In meetings with prospective investors in recent weeks, Instacart executives said they didn’t plan to issue many new shares in their IPO, the people said. The sale of mostly employee shares would allow Instacart’s staff, including some of its earliest hires, to at last cash out of some of the shares they have been accumulating. The move could help Instacart, which was founded in 2012, retain talent by allowing employees more ways to benefit from their shares. Listed shares could also make Instacart more attractive to new employees than startups that have decided to wait for a better market to list.

Velocity Capital Management is joining a small but growing group of specialized investment firms seeking to capitalize on the booming sports and entertainment industries, WSJ reports. The new firm, launched by veteran sports investors David Abrams and Arne Rees, initially plans to invest not directly in sports teams themselves, but in the companies that serve those teams and entertainment franchises or that help monetize their intellectual property.

Funds

DTCP held the first close of its Growth Equity III Fund at $300 million. The fund was launched in March and has raised capital from new and existing investors including Deutsche Telekom and SoftBank. The new vehicle will back cloud-based enterprise software and business software-as-a-service companies in the fields of cybersecurity, Web3, artificial intelligence, fintech, vertical SaaS services, as well as IT applications and cloud infrastructure software, across Europe, Israel and the U.S. The fund has closed its first deal, providing a $15 million investment to Cognigy.ai as part of the company’s Series B funding round.

People

Enterprise automation company SnapLogic Inc. named Ahsan Malik to the post of chief financial officer. He joins the company from Malwarebytes. In December 2021, San Mateo, Calif.-based SnapLogic said it raised a $165 million round at a $1 billion valuation led by Sixth Street Growth.

Wilco, an upskilling platform for software developers, appointed Natasha Shine-Zirkel as chief business officer. She was previously business verticals group manager at Fiverr. Tel Aviv-based Wilco is listed in the portfolios of Samsung Next, Vertex Ventures Israel and the WeWork Alumni Fund.

Swiftly Systems Inc., a startup delivering omnichannel tools for retailers, landed $100 million in Series C funding led by BRV Capital Management, bringing the company’s valuation to more than $1 billion. Wormhole Capital previously invested in Swiftly.

Kate Farms, a Santa Barbara, Calif.-based startup producing plant-based formulas for tube and oral feeding, completed a $75 million Series C round. Led by Novo Holdings, the investment included participation from Kaiser Permanente Ventures, Goldman Sachs Asset Management, Main Street Advisors and others.

Sievo, a Helsinki-based procurement analytics software-as-a-service provider for data-driven enterprises, raised $44 million in growth funding from Susquehanna Growth Equity.  Susquehanna’s Ben Weinberg and Aneesha Raghunathan will join the company’s board.

Yellow Card Financial, a pan-African cryptocurrency exchange, completed its $40 million Series B round. Lead investor Polychain Capital was joined by Valar Ventures, Third Prime Ventures, Sozo Ventures, Castle Island Ventures, Fabric Ventures, DG Daiwa Ventures, the Raba Partnership and others in the round.

PowerToFly, a New York-based diversity recruiting and retention platform, secured an investment of more than $30 million. Funds managed by Morgan Stanley Expansion Capital led the round, which included contributions from Morgan Stanley Next Level Fund, Chartline Ventures and Grasshopper Bank.

1MRobotics, a Tel Aviv-based last-mile fulfillment robotics and automation provider, emerged from stealth with $25 million in combined Series A and seed funding. Ibex Investors led the Series A portion, with Emerge, Target Global and INT3 also participating.

Pano AI, a San Francisco-based startup providing active wildfire detection using artificial intelligence, raised $20 million in Series A financing. Initialized Capital led the investment, which included additional support from Congruent Ventures, Convective Capital, DCVC, January Ventures, Quiet Capital and others. Kim-Mai Cutler, partner at Initialized Capital, will join the company’s board.

Federato, a San Francisco-based insurtech startup, picked up $15 million in Series A funding. Emergence Capital led the round, with Partner Lotti Siniscalco joining the board. Caffeinated Capital and Pear also invested.

Classiq, a Tel Aviv-based quantum software startup, said Awz Ventures added $13 million to the company’s Series B round, bringing the round total to $49 million.

Fermat Commerce, which lets brands sell to consumers directly through influencer content, was seeded with a $12 million investment from Greylock Partners, QED Investors, Courtside Ventures and others.

Fondue CashBack, a New York- and Tel Aviv-based cash back app, closed a $10.5 million seed round. Led by Quiet Capital and Hanaco Ventures, the funding included support from Infinity Ventures, Ground Up Ventures, Sugar Capital, Starting Line, R-Squared Ventures, Gaingels, Verissimo Ventures, Samsung Next and JAM Fund.

CoverTree Inc., a Detroit-based digital insurance provider to residents of manufactured homes, fetched $10 million in seed funding. Co-led by AV8 Ventures and Distributed Ventures, the round saw contributions from Detroit Venture Partners, Ludlow Ventures and Annox Capital.

• Hackers leaked ‘Grand Theft Auto’ footage, Rockstar Games says
   
• China’s EV startups suffer widening losses despite sales boom
   
• Wegmans stops using self-checkout app after suffering losses
   
• Why Adobe wants Figma and why some investors are worried
   
• Games that push the brain to the limit get scientists’ attention in fight against dementia

• San Francisco’s biggest conference is back but a full recovery remains elusive (Bloomberg)
   
• Clearview AI, used by police to find criminals, is now in public defenders’ hands (New York Times)

This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley, Angus Loten and Marc Vartabedian.

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