Congrats if you are an early employee or investor of the bay area-based unicorn startup Databricks who exercised your stock options! You could be in for some serious cash and potentially serious tax savings.
It has been reported that Databricks raised $1 billion at a $28 billion valuation before gearing up for a soon-to-be direct listing of the Company’s stock.
One factor we are sure of is the Company was incorporated in 2013; therefore, if you are a stockholder you could qualify for 100% in tax savings. Check out a few other details we have already hashed out for you below:
Description: Databricks is a software platform that provides a centralized location for data analytics across the business, data science, and data engineering. The Company leverages a proprietary AI and data warehouse, Delta Lake, to unify customers’ data.
Incorporation Date: May 31, 2013 as Delaware C Corporation, which is a qualified legal entity for QSBS
Liquidation event details (date, type, etc.): The first round of financing that was above $50M was on December 15, 2016, which was a Series C round of financing with total funding of $60M. Therefore, it is safe to assume any stock issued after this date will not qualify but any stock issued before likely will.
QSBS Potential: The Company is a technology-based data warehouse platform, which is a qualified QSBS industry. The Company had not raised over $50M until December 15, 2016, which assumes the Company met the asset test beforehand. There is a strong likelihood that any stock issued before 2018 could qualify for QSBS, assuming no redemptions and the Company meets the active test.
If you obtained shares in Databricks prior to December 15, 2016, please contact us to evaluate your potential QSBS eligibility.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.