Databricks Acquires data startup Arcion for $100 million

Aggressive M&A game continues for Databricks before IPO.

Hey Everyone,

I’m always thinking about Snowflake and Databricks, the new breed of data analytics and data cloud platforms. Databricks has now made another significant acquisition of late.

News of the acquisition comes after Databricks announced a $500 million funding round in September, with investors including Nvidia and Capital One. Databricks had also participated in Arcion’s funding in its Series A.

Databricks was last valued at $43 Billion. Databricks is a so-called white house data lakehouse provider and Arcion is an important piece to the puzzle. Databricks’ chief product is a data analytics tool, powered largely by an artificial intelligence method called deep learning, but there’s no data for the platform to analyze when a client signs up, Ghodsi said. Once Databricks integrates Arcion’s technology, it should be much easier for clients to add their data from software systems such as Salesforce, Workday, Oracle and so forth according to CNBC reporting with the CEO.

Arcion is Databricks’ first acquisition since acquiring MosaicML, an AI infrastructure startup specializing in training large language models, for $1.3 billion. With MosaicLM and Arcion Databricks is taking the next step to be IPO ready and take on Snowflake in the big leagues.

The way Databricks itself explains it is thus:

The new tie-up gives Databricks control over Arcion’s suite of no-code “connectors” that allow enterprise customers to replicate and ingest data from the multitude of different sources and applications they rely upon, such as Salesforce, SAP, and Workday, as well as transactional databases such as Oracle, MySQL, and Postgres.

• This will enable Databricks to provide native solutions to ingest data from various databases and SaaS applications into the Databricks Lakehouse Platform.

• Databricks is widely seen as a top contender for an initial public offering in the near future. This is likely in 2024.

• Prior to this, customers would need to use a third party tool like Informatica, Qlik or Alteryx to get the data into Databricks. Arcion will give the company a tool of its own.

This makes Databricks a lot easier to use in a self-serve manner. Arcion was founded in 2016 by Rajkumar Sen, a former employee at Oracle, and Miryana Joksovic, a former startup advisor. The $100 million valuation is after bonuses and incentives for its founders.

Databricks plans to increase Arcion’s staffing post-acquisition, Ghodsi added. TechCrunch added an easy explanation too:

The idea behind having a data storage solution like Databricks is about putting that data to work to do things like building dashboards, developing data applications and feeding machine learning models for AI, but to do that, companies need to move the underlying data into something like Databricks.

Data Lakehouse Platforms have emerged as the de facto standard for enterprise data and AI platforms. However, these data platforms are only as valuable as the data in them. Ingesting data from existing databases and applications remains complicated, fragile, and costly. With these two acquisitions DAtabricks feels more whole, and IPO ready. I could easily see Databricks being worth closer to $60 Billion once they go IPO. Snowflake with its tremendous growth trades at a rich premium.

This acquisition will enable Databricks to natively provide a scalable, easy-to-use, and cost-effective solution to ingest data from various enterprise data sources. Building on a scalable change data capture (CDC) engine, Arcion offers connectors for over 20 enterprise databases and data warehouses.

While Arcion is a fraction of the price of MosciacML, and is less directly focused on AI, it gives the company an essential ingredient in data ingestion, and the fact that the companies have been partners in the past, could help as they come together.

“We think we can make a lot of revenue on this particular acquisition,” Ghodsi said. “This is one where we think it’s going to be revenue-accretive.”

"To build analytical dashboards, data applications, and AI models, data needs to be replicated from the systems of record like CRM, ERP, and enterprise apps to the Lakehouse,” said Ali Ghodsi, Co-Founder and CEO at Databricks. “Arcion’s highly reliable and easy-to-use solution will enable our customers to make that data available almost instantly for faster and more informed decision-making. Arcion will be a great asset to Databricks, and we are excited to welcome the team and work with them to further develop solutions to help our customers accelerate their data and AI journeys.”

I’m excited to see what Databricks becomes, because in a sense it’s connected to so many data science and A.I. jobs in the real world and industry. Founded by the original creators of Delta Lake, Apache Spark™, and MLflow, Databricks is on a mission to help data teams solve the world's toughest problems.

Data Lakehouse Platforms have emerged as the de facto standard for enterprise data and AI platforms, hence it has a lot of hype behind it.

Arcion is the modern and scalable way to replicate enterprise databases, data warehouses, and cloud analytics platforms using change data capture (CDC) to power the next generation of AI applications. Enterprises utilize Arcion’s zero-impact, agentless CDC pipelines to replicate data with low latency and consistency. It sounds like a very complementary piece to Databricks at a pretty affordable price that might improve the accessibility and revenue generation of the company.