Databricks’ $100B Valuation: What QSBS Holders Can Do Next

Aug 19

Databricks has signed a term sheet for a new late-stage round implying a valuation north of $100B. Reports note Thrive Capital and a16z involvement in a round coming less than a year after the prior raise at $62B. The company cites product buildout and M&A as uses of proceeds.

The QSBS reality at this stage

Databricks was founded in 2013, so founder shares and very early issuances likely qualified as QSBS at the time of issuance, subject to the usual tests.
The company has long since exceeded the $50M gross-asset threshold, so newer issuances are generally not QSBS.
For founders and early holders who have taken liquidity in prior tenders or secondaries, the per-issuer exclusion cap is the binding constraint: up to $10M of gain per taxpayer per issuer or 10x basis, whichever is greater. With near-zero founder basis, the 10x basis alternative often adds little.
Once the $10M cap is fully used, additional realized gains on otherwise-eligible QSBS are taxable unless you plan ahead.

Why a QSBS rollover can still matter after 5 years

Even when stock has been held more than five years and the $10M cap is already used, a QSBS Rollover can defer the excess gain beyond the cap if you reinvest into new QSBS within 60 days. This preserves tax efficiency and lets you continue your holding period with a new $10M exclusion cap.

If this round includes secondary liquidity

Mega-rounds often include a secondary component. If you sell QSBS in a structured secondary and you have already used most or all of your 1202 cap, plan to deploy QSBS Rollovers on the taxable portion. That means working with our team to set a rollover plan ahead of the trade date, and be ready to move within the 60-day rollover clock.

A quick checklist before executing

Original issuance verified and five-year clock documented
Aggregation across all prior Databricks sales to confirm remaining 1202 room
Confirm no disqualifying redemptions around original issuance period
Calendar the 60-day rollover deadline and escrow mechanics

Why this matters now

At a $100B+ valuation and with another large round in market, additional employee and founder liquidity is plausible, and the issuer has long been over the $50M line. New investors will not get QSBS, and long-time holders are mainly navigating caps and timing. That puts §1045 rollovers front and center for any taxable excess above $10M.

______________________________________

You could benefit from a QSBS rollover if:

You recently sold QSBS before the 5 year minimum hold period
You recently sold QSBS that you held for 5 years, but your gain exceeds $10M
You’re considering an exit in the next 1-4 years and want to think ahead about tax planning
Are an angel investor seeking flexible QSBS opportunities to help defer gains

QSBSrollover.com offers solutions for QSBS gain holders in need of a flexible, low-risk, and relatively liquid QSBS opportunities. Get in touch with our team today to learn how to partner with us and potentially save millions in gains tax from a stock sale.

Here are some of the questions we typically ask when having a first meeting with potential partners:

Did you recently sell or are you holding Qualified Small Business Stock?
When did you sell your stock?
Was this your first liquidity event?
Are you a founder, early employee, outside investor/angel, etc?
Are you certain that your stock met the Active Trade/Business and other requirements under Section 1202? (Outside of holding period requirements)
What is your intended rollover amount?
How long did you hold your initial stock?

Brady Weller