Databricks: liquidity on a schedule, not a cliff

The situation

Databricks' RSU grants, like many pre-IPO companies', historically carried a "double trigger": shares only converted from restricted units into actual stock once two conditions were met — time-based vesting and a liquidity event such as an IPO. That second trigger meant employees could have fully time-vested RSUs that still weren't real, sellable shares, sometimes for years, while the company stayed private and kept raising primary rounds at higher valuations.

How the deal worked

In 2025, Databricks removed the second trigger. Time-vested RSUs began converting into actual shares on their normal vesting schedule, whether or not the company had gone public. That single structural change turned a large, growing pool of paper equity into something employees actually held — and created a recurring need for a liquidity mechanism, since there was still no public market to sell into.

Databricks answered with periodic company-organized tender offers instead of waiting for an IPO. A tender that closed in March 2026 was, for many participants, the second such window within about a year, priced at the company's then-current 409A-implied valuation. The tenders followed a December 2025 Series L that raised $4 billion at a $134 billion valuation, with an IPO widely expected in the second half of 2026.

The outcome

Employees now have a predictable, if not guaranteed, path to converting vested equity into cash roughly annually, rather than facing years of illiquidity with no visibility into when — or whether — an IPO would arrive. For the company, offering that liquidity is increasingly framed as a retention tool in a hiring market where AI and data infrastructure talent has significant leverage.

What it teaches

A seemingly technical plan-document detail — whether an RSU has one trigger or two — has an outsized effect on when equity becomes real, sellable stock. And once vested shares are real, companies that want to keep top talent while staying private for years longer than prior generations of startups increasingly need a recurring liquidity program, not a one-off tender, to match. See employee & founder liquidity for the mechanics of a single tender.