Fidelity leads $118 million investment in VSAT data

VAST Data is preparing for an initial public offering as it raised $118 million in the latest funding round that valued the data infrastructure company at $9.1 billion, more than double what it was worth two years ago, the company told Reuters in an interview.

Fidelity Management & Research led the funding, with participation from venture capital firms New Enterprise Associates, BOND Capital and Drive Capital, in a rare late stage financing round amid a slow funding environment this year.

VAST Data said it has tripled its revenue year-over-year, crossing $200 million in annual recurring revenue by end of September as generative AI workload surges.

The New York-based company helps enterprises with their data-intensive computing needs. Its software lets clients catalog, refine and preserve both structured and unstructured data, an increasing demand as AI labs such as OpenAI use huge datasets train large language models and enterprises try to mine insights from their proprietary data.

Backed by Nvidia, it has struck partnerships with specialized AI cloud computing provider such as CoreWeave, Lambda and Abu Dhabi’s Core42.

“We’re not just addressing these new AI workloads, but we’re going after and servicing some of the world’s largest enterprises and their data needs, with the expectation that at some point AI will get to their data as well,” said Jeff Denworth, co-founder at Vast Data.

Denworth said the company, while making internal preparations, will consider an IPO filing at the right time. It has not hired banks for a public listing, but a 2024 IPO could be “on the cards”, depending on the market conditions, according to Denworth.

The tech IPO market has been mostly muted this year, as investors still grapple with the high interest rate environment and value profitability more than growth, an area in which VC-backed startups generally lag.

Vast Data said it has had positive cash flow for the past few years with a gross margin of nearly 90%, an important metric by which public market investors evaluate companies.

AI-related companies remain a rare bright spot amid a slow market for late stage private funding, as investors try to capitalize on the technology’s potential with more enterprise trying to adopt it. Another AI data company, Databricks, raised over $500 million from funds led by T. Rowe Price in September.

Vast Data was valued at $3.7 billion in its last private funding round when it raised capital from Tiger Global in 2021. Its backers also include General Atlantic and Norwest Venture Partners.

The company has more than 700 employees globally and said it has been entering new international markets, including Asia Pacific, Middle East and Europe. Reuters