Comment by braza

Not a Ponzi, but definitely some markup and valuation engineering.

Let’s say that Databricks has 100B valuation (just for the sake of simplicity).

They do this round, and due to this markup they can do acquisitions via stock option exchange. For instance, let’s say that you’re Neon, and you as a founder wants some sort of exit.

It’s preferable to get acquired for 1B with let’s say, 100Mi in cash and 900Mi in Databricks paper valuation shares; than to wait for a long process for an IPO.

If the mothership company (Databricks) goes public, you have liquidation and a good payday, or in meanwhile you can sell secondaries at a discount.