Databricks to buy open-source database startup Neon for $1B
Data analytics platform Databricks said on Wednesday that it has agreed to acquire Neon, a startup building an open source alternative to AWS Aurora Postgres, for about $1 billion.
Databricks said acquiring Neon’s tech would let it combine the startup’s serverless relational database management system with its own data intelligence services to let its customers deploy AI agents more efficiently.
Founded in 2021 by CEO Nikita Shamgunov and software engineers Heikki Linnakangas and Stas Kelvich, Neon offers a managed cloud-based database platform (with free and usage-based paid plans) that lets developers clone databases and preview changes before they go to production. The platform automatically scales processor, memory and storage according to usage, and supports branching — isolated database instances for testing and development — as well as point-in-time recovery.
Those capabilities, Databricks says, are ideally suited to workloads run by AI agents, which operate faster than human developers but often require supervision to control for errors. Citing recent telemetry, the company said 80% of the databases “provisioned on Neon were created automatically by AI agents rather than by humans.”
“The era of AI-native, agent-driven applications is reshaping what a database must do,” said Ali Ghodsi, co-founder and CEO of Databricks, in a statement. “Neon proves it: four out of every five databases on their platform are spun up by code, not humans. By bringing Neon into Databricks, we’re giving developers a serverless Postgres that can keep up with agentic speed, pay-as-you-go economics and the openness of the Postgres community.”
Neon has so far raised $129.6 million, according to Crunchbase, and its investors include Microsoft’s venture arm M12, General Catalyst, Menlo Ventures, and Notable Capital. Databricks, for its part, has so far accumulated more than $19 billion in financing, and in January closed a $15.3 billion financing at a $62 billion valuation.
Databricks hasn’t held back from dipping into its warchest as it seeks to capitalize on the AI boom and position itself as a top service to build, test and deploy AI models and agents. The company last June acquired data management company Tabular, reportedly for nearly $2 billion, and in 2023 bought MosaicML, an open-source platform for training large language models and deploying AI tools, for $1.3 billion.
Ram is a financial and tech reporter and editor. He covered North American and European M&A, equity, regulatory news and debt markets at Reuters and Acuris Global, and has also written about travel, tourism, entertainment and books.
