A report over the weekend by Reuters that the Israeli company Vast Data is about to raise additional capital at a valuation of $30 billion shook the market. It was a week in which another Israeli high-tech company – CyberArk – was sold at a valuation of $25 billion, just a few months after the company Wiz was sold at a record valuation of $32 billion. These are amounts that place them at the top of the largest Israeli companies – and then transfer them into American hands.
The story of Vast Data is different from that of Wiz and CyberArk. First of all – it is not being sold but rather raising additional capital. According to the Israeli site StartupHub.ai, the current fundraising round will total a massive sum of $1 billion. The only Israeli company that ever raised such an amount before was Wiz. But Vast Data is different here too, because its valuation is estimated at $30 billion, compared to Wiz which was valued then, in May 2024, at only $12 billion.
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The company's directors. From right: Avery Pham, Renen Hallak, Shahar Finblit, Michael Wing and Jeff Denworth
(Photo: courtesy of Vast Data)
Valuation is not an exact economic measure. It is an agreement between investors that determines how much money they will transfer to the company in exchange for a share of its holdings. In recent years, many high valuations have later crashed in the face of reality. But the story of Vast Data is different: its valuation is growing at a dizzying pace. Just a month ago, there was talk of a raise at a valuation of $25 billion – meaning the valuation has now increased by $5 billion. In a 2023 fundraising round, it was valued at $9.1 billion, 2.5 times more than the previous round, and now the valuation is three times or more higher than the 2023 round.
There’s another difference between Vast Data and many Israeli companies that have been sold in the past two years: it is not a cyber company. It belongs to another booming field in global high-tech: artificial intelligence. The fact that chatbots like ChatGPT, Gemini and Grok respond to our questions within a reasonable time is, in some cases, based on the capabilities of Vast Data.
The company has already raised $380 million
Vast Data developed technology that significantly optimizes the use of NVIDIA’s AI processors, accelerating the work of massive server farms being built in the U.S. and other countries – all to meet the endless demand for AI – and it saves a lot of money for its customers.
Vast Data differs in yet another aspect: its current investors, and those now seeking to invest, are exceptional companies. These include Google (via Alphabet’s CapitalG fund) and NVIDIA, which already invested in the company in the past and now wants to increase its stake. To date, the company has raised $380 million, so the current round will significantly increase its capital.
In practice, the company doesn’t need capital to survive – it has been profitable since 2020, with annual recurring revenue (ARR) of $200 million last year and a forecast of $600 million this year. It does need the capital to expand quickly to the massive data centers now being built, and to signal to the market its size and strength – in preparation for a future IPO, or alternatively, a sale for tens of billions.
Vast Data is also different from Wiz and many other Israeli startups in its character: it lacks ostentation and even tries to hide from the media. The company’s founders have rarely given interviews, its offices are not in flashy buildings, it employs about 300 workers in Israel (around 1,000 in total), and those employees don’t enjoy celebrity-filled parties or gourmet chef lunches. On the other hand, employees did benefit from secondary fundraising that deposited money into their bank accounts – and that may be more important than parties.
Vast Data declined to answer our questions about the planned fundraising. The deal is expected to be finalized this week, and then we will likely get answers to at least some of the questions.
So who is Vast Data, and how is it that most of us haven’t heard of it until now? The company was founded in 2016 by Renen Hallak (CEO), together with Shachar Finblit (CTO), Jeff Denworth, who was VP of Marketing, and Alon Horev, who is no longer with the company. Its headquarters are in the U.S., and it has two development centers in Israel.
The technology developed by Vast Data is a software platform that unifies storage, databases and computing, thereby enabling the optimization and acceleration of AI models. Among other things, it relies on the use of especially fast “flash” memory. Major AI companies, as well as other large companies using AI, are facing huge costs in operating data centers, electricity consumption, and cooling systems. Vast Data cuts their costs and improves results. It also significantly improves access to massive data troves and enables innovative data analysis in research, media, and finance.
Vast Data’s technology stood out from the beginning, and investors constantly courted it. Among its backers are giant funds like Tiger Global and General Atlantic, institutional entities like Goldman Sachs and Fidelity, Israeli funds like Vintage, Dell Technologies, Greenfield, and 83North, and one particularly unique investor: NVIDIA – which became a shareholder through Mellanox’s 2020 investment, and increased its stake with a direct investment in 2021.
Now, NVIDIA is leading negotiations for another $1 billion investment. One could sense just how enthusiastic NVIDIA is about Vast Data’s technology when its CEO, Jensen Huang, highlighted the company at international conferences and explained how it optimizes the performance of AI chips.
The company’s client list is particularly interesting. It includes the U.S. Air Force, NASA, the U.S. Department of Energy, Boston Children’s Hospital, travel company Booking Holdings, telecom giant Verizon, film studios Disney and Pixar, video call company Zoom. Its strategic AI clients include Elon Musk’s AI firm xAI, data center operators CoreWeave, Lambda and Core42, among many others.
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Vast Data has maintained a positive cash flow for the past four years. It ended 2024 with many tens of millions in revenue and holds a $1 billion backlog of long-term contracts, signed with large clients who purchase services for around 3 to 7 years on average. This year, the company’s revenue is expected to reach hundreds of millions, and the revenue backlog so far totals about $2 billion.
Vast Data is careful to present financial data and valuation figures throughout – a rarity among other companies, but not accidental. The company once stated that transparency conveys strength and stability to clients and convinces them to trust Vast Data. All signs now point toward a fast track toward a Nasdaq IPO.
U.S. media have quoted investors and bankers who express confidence in the success of such a move. It appears the company agrees – it recently hired a Chief Financial Officer, a move that suggests an IPO is in sight. In 2023, CEO Hallak said the company was preparing to go public, though he didn’t specify a timeline. It now seems that the timeline is approaching.