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Databricks bets big on serverless Postgres with its $1 billion Neon acquisition
Databricks has agreed to acquire Neon, an open-source database startup, for approximately $1 billion. The acquisition is set to enhance Databricks’ data intelligence services by integrating Neon’s serverless relational database management system.
Neon, founded in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, offers a cloud-based database platform with features like automatic scaling, branching for isolated database instances, and point-in-time recovery. Its platform allows developers to clone databases and preview changes before they go live. According to Databricks, Neon’s capabilities are suited for AI agent workloads that require speed and supervision.
Telemetry data cited by Databricks indicates that 80% of databases provisioned on Neon are created automatically by AI agents. Ali Ghodsi, Databricks’ co-founder and CEO, stated that the acquisition will provide developers with a serverless Postgres solution that matches the speed of AI agents, offers pay-as-you-go economics, and maintains the openness of the Postgres community.
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Neon has raised $129.6 million in funding from investors such as Microsoft’s M12, General Catalyst, Menlo Ventures, and Notable Capital. Databricks, with over $19 billion in financing, recently closed a $15.3 billion financing round at a $62 billion valuation in January. The company has been actively acquiring firms to capitalize on the AI boom, including Tabular for nearly $2 billion last June and MosaicML for $1.3 billion in 2023.