Databricks Acquiring OpenAI Competitor MosaicML for $1.3B

Data management firm Databricks has agreed to purchase generative AI company MosaicML in a deal valued at $1.3 billion. The three-year-old generative AI startup has developed a platform it says makes it “fast, cost-effective, and easy” for companies to train LLMs and deploy tools to use them. MosaicML has privately raised roughly $64 million to date. Its last valuation was $222 million in January, which means it was purchased for a healthy 6x multiple in a move that appears to prime Databricks for what one brokerage calls an “inevitable” IPO.

The San Francisco-based Databricks says more than 10,000 global organizations — including Comcast, Condé Nast “and over 50 percent of the Fortune 500” — use its Databricks Lakehouse Platform to integrate their data, analytics and AI.

MosaicML investors included DCVC, AME Cloud Ventures, Atlas, Frontline, Lux, Playground Global and Samsung Next. Considering “OpenAI was valued at upwards of $40 billion in its last round from Microsoft,” TechCrunch says “Databricks got a steal here.”

MosaicML’s key differentiators are that it is open source and its focus is empowering firms to train LLMs using their own data. Its latest foundation model is MPT-30B, whose predecessor MPT-7B has been downloaded 3.3 million times, according to the deal announcement from Databricks.

MosaicML customers include the AI2 (Allen Institute for AI), Generally Intelligent, Hippocratic AI, Replit and Scatter Labs.

Databricks says it expects to onboard the entire MosaicML team, with CEO and co-founder Naveen Rao (former AI chief at Intel) said to be definitely staying on. “At MosaicML, we believe in a world where everyone is empowered to build and train their own models, imbued with their own opinions and viewpoints,” Rao said, noting Databricks “will help us make that belief a reality.”

“The deal will see MosaicML become a part of the Databricks Lakehouse Platform, providing generative AI tooling alongside the Databricks’ existing multicloud offerings, which include integration, storage, processing, governance, sharing, analytics and AI-related services,” TechCrunch reports.

Databricks and MosaicML share a vision grounded in transparency and open source contributions. “Every organization should be able to benefit from the AI revolution with more control over how their data is used,” Databricks co-founder and CEO Ali Ghodsi said, adding that the alliance will help customers “navigate the biggest computing revolution of our time.”

The brokerage earlier this month wrote that Databricks was “reported to be building the internal software needed to report financial information and comply with regulatory requests once public,” estimating its pre-MosaicML market valuation after an IPO could be “in excess of $40 billion.”

Databricks Introduces New Generative AI Tools, Investing in Lakehouse AI, PR Newswire, 6/28/23

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