“The era of AI-native, agent-driven applications is reshaping what a database must do. Neon proves it: Four out of every five databases on their platform are spun up by code, not humans,” remarked Databricks CEO Ali Ghodsi, highlighting a significant shift in the database landscape.
In a strategic move, Databricks has announced its acquisition of Neon, a startup specializing in serverless Postgres, for a substantial billion. This acquisition aims to assist businesses in dismantling data silos, streamlining architecture, and enhancing the capabilities of AI agents.
“Neon exemplifies the transformation underway,” Ghodsi continued. “With over 80 percent of databases on their platform being generated by AI, it’s evident that the future is being coded, not manually created.”
By integrating Neon’s innovative technology, Databricks intends to provide developers with serverless Postgres solutions that align with the rapid pace of AI development, flexible pricing models, and the collaborative spirit of the Postgres community. This acquisition follows Databricks’ recent completion of a billion financing round, underscoring its commitment to expanding its technological footprint.
“In 2024, we witnessed a pivotal change: the rise of AI-native applications,” stated Neon CEO Nikita Shamgunov in a recent blog post. “Our architecture was ideally positioned to support this evolution, leading to a remarkable shift where AI agents began creating databases autonomously.”
Shamgunov articulated the vision behind the merger, aiming to establish the premier Postgres experience globally, positioning it as a cornerstone of modern AI-native application stacks.
Who Is Neon?
Founded in 2021, Neon emerged as a Database-as-a-Service provider, offering a fully managed serverless Postgres database tailored for developers. The startup earned a spot on CRN’s 10 Hottest Big Data Startups list in 2022.
In 2023, Neon launched the Neon Partner Program, followed closely by a successful million Series B funding round. The company has rapidly ascended to become one of the most sought-after developer databases, according to Shamgunov. The Neon platform is designed to automatically adjust processing power, memory, and storage based on usage, while also supporting features like branching and point-in-time recovery.
“Our mission has always been to create the best Postgres solution for the cloud—serverless, highly scalable, and accessible to all. With this acquisition, we anticipate accelerating our progress with the backing of a leading AI innovator,” Shamgunov expressed. “Databricks has a legacy of fostering open-source initiatives that empower developers to harness data and AI at any scale.”
Databricks’ Plan For Neon After Acquisition Close
Post-acquisition, Databricks and Neon will collaborate to eliminate the conventional constraints of databases that necessitate simultaneous scaling of compute and storage resources. The fusion of Neon’s serverless Postgres architecture with the Databricks Data Intelligence Platform is set to enhance the efficiency of developers and enterprise teams in building and deploying AI agent systems.
Once the integration is complete, the combined entity aims to mitigate performance bottlenecks arising from numerous concurrent agents while simplifying infrastructure, lowering costs, and fostering innovation, according to Databricks. “Our roadmap is accelerating, and our ambition is only growing,” Shamgunov stated. “The Neon journey has been remarkable thus far, but we are merely at the beginning.”
The acquisition is anticipated to finalize later this year, marking a significant milestone in the evolution of database technology.
