Naveen Rao, who serves as the artificial intelligence chief at Databricks Inc., a startup valued at $100 billion, plans to step down from his role to establish a new company focused on developing an innovative computer design.

Rao's exit represents a crucial juncture for Databricks, an organization that has swiftly climbed to a $62 billion market value after completing its $10 billion Series J financing round. 

Although Rao will move into an advisory position, his latest endeavor—a new company focused on enhancing AI computing performance—has already received financial support from Databricks, with the exact investment amount not being revealed. 

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This collaboration highlights Databricks' dedication to preserving its leadership position in the artificial intelligence sector while encouraging innovation through strategic partnerships with external entities.

He has also begun preliminary discussions with additional investors regarding financial support for the new enterprise, which aims to create advanced computing technology to tackle the increasing expenses associated with AI computational power.

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As a veteran entrepreneur, Rao previously sold his data and AI analytics company MosaicML to Databricks in 2023 for $1.3 billion. MosaicML had secured approximately $30 million in funding from investors such as Maverick Ventures, Lux Capital and DCVC. Prior to this, Rao helped establish Nervana Systems, a machine intelligence platform that Intel Corp. purchased in 2016 for roughly $350 million.

Considering Rao's successful history, his new business venture may generate substantial interest from investors and command a high valuation.

He would become part of a growing trend of notable technology leaders launching their own companies, including former OpenAI Chief Technology Officer Mira Murati, whose firm Thinking Machine Labs received a recent valuation of $10 billion, and former Salesforce co-CEO Bret Taylor, whose two-year-old AI company Sierra also achieved a $10 billion valuation.

 

Databricks' bold capital raising efforts, securing $10 billion in funding at a $62 billion company valuation, demonstrate strong investor belief in the company's future prospects.

The substantial investment round will fund artificial intelligence product development, strategic acquisitions, and global market expansion, enabling Databricks to take advantage of the growing market demand for AI technologies. Nevertheless, losing a senior executive such as Rao creates concerns about maintaining innovation leadership.

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The company's success in sustaining its current trajectory will rely on its ability to keep talented employees and implement its strategic plans despite the absence of its artificial intelligence leader.