Databricks announced it will acquire Neon, a startup offering a serverless, open-source Postgres database, for around $1 billion.
The deal is aimed at enhancing Databricks’ capabilities for AI-native applications, especially agent-driven workloads.
Founded in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, Neon provides a cloud-based PostgreSQL platform that supports cloning, branching, autoscaling, and point-in-time recovery. These features are increasingly crucial for AI agents, which now account for 80% of databases provisioned on Neon, according to Databricks.
Databricks CEO Ali Ghodsi highlighted that Neon’s architecture aligns with the needs of AI agents operating at high speed, offering pay-as-you-go economics and the flexibility of open-source Postgres.
Neon has raised $129.5 million to date from investors like Microsoft’s M12, General Catalyst, and Menlo Ventures. Databricks, meanwhile, has raised over $19 billion, with a recent valuation of $62 billion. This marks another strategic acquisition by Databricks in the AI space, following purchases of Tabular (~$2B) and MosaicML ($1.3B).
