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DataRobot pre-IPO funding raises company valuation to $2.7B

Amid the pandemic, Boston-based AI vendor DataRobot raised $270 million in a pre-IPO fundraising round. The company is likely to file for an IPO.

DataRobot, an artificial intelligence vendor specializing in automated machine learning, raised $270 million in a pre-IPO funding round led by Silicon Valley investment firm Altimeter Capital, the vendor said on Tuesday.

With the new financing, DataRobot, founded in 2012, is now valued at more than $2.7 billion.

In the midst of a pandemic, this new round of financing indicates how eager venture capitalists and investment firms are to finance AI vendors.

Keen to fund AI

These financial firms understand that machine learning is a key technology for almost every type of business and consumer process going into the future, said Dave Schubmehl, research director for cognitive/artificial intelligent systems and content analytics at IDC.

"VCs believe that DataRobot and companies like it that are now providing tools and services for the entire AI lifecycle will be increasingly critical for organizations that are developing and running their own machine learning models," he said.

Meanwhile, although DataRobot laid off multiple employees earlier this year due to what it described as "changing market conditions" caused by COVID-19, like many other vendors, the Boston-based vendor had prepared for the worst when COVID-19 struck and the strategic downsizing was a not a sign of financial distress, Schubmehl said. 

DataRobot funding
DataRobot raised $270 million in pre-IPO fundraising.

Continued growth

Over the past few years, DataRobot made several acquisitions, and some of the layoffs may also have involved duplications of resources created by these acquisitions, Schubmehl added.

"Since then, I believe DataRobot has continued to grow, as has the entire industry, and they are now positioning themselves for significant growth in 2021 and beyond," he said. 

VCs believe that DataRobot and companies like it that are now providing tools and services for the entire AI lifecycle will be increasingly critical.
Dave SchubmehlResearch director for cognitive/artificial intelligent systems and content analytics, IDC

According to Igor Taber, SVP of corporate development and strategy at DataRobot, the new funding would help strengthen DataRobot's enterprise AI platform through strategic acquisitions, product development and investments in talent.

DataRobot made a series of acquisitions last two years, acquiring data prep vendor Paxata, model management vendor ParallelM and collaboration platform Cursor in 2019. In 2020, DataRobot purchased Boston Consulting Group's Source AI technology. 

An IPO is likely in the company's future, Taber added.

Last week, another enterprise AI vendor, C3.ai, valued at $3.3 billion, filed for an IPO. The company plans to list under the ticker "AI" in the New York Stock Exchange.

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