On Wednesday, Databricks announced its intention to acquire Neon, a developer renowned for its innovative cloud-based dataset platform built on PostgreSQL. This strategic move aims to enhance the capabilities available to developers and autonomous AI agents, facilitating the creation of advanced applications.
Acquisition Details
While the financial specifics of the deal remain undisclosed, various reports estimate the acquisition’s value at approximately billion. Neon, established in Menlo Park, California, is a PostgreSQL database startup that successfully raised 9.6 million prior to its acquisition.
Through this acquisition, Databricks, headquartered in San Francisco, expands its portfolio to include open-source database functionalities. This addition is expected to streamline the development of data and AI applications, potentially serving as a foundational element for agentic AI development.
Strategic Growth in AI Development
In recent years, Databricks has actively pursued a series of acquisitions to cultivate an environment conducive to generative AI development, responding to the increasing enterprise interest in AI tools. Notably, the company’s acquisition of MosaicML in June 2023 laid the groundwork for what is now known as Mosaic AI. Subsequent acquisitions, including Arcion, Einblick, and Lilac AI, have further enriched Databricks’ AI development capabilities.
Additionally, the acquisition of BladeBridge has enhanced data migration capabilities, while the purchase of Tabular has introduced support for Apache Iceberg tables, both of which are beneficial for AI application development. Similar to the Neon acquisition, both MosaicML and Tabular were valued at over billion. Databricks has leveraged substantial venture capital funding, including a record billion raised in December, to strategically acquire technologies that bolster its offerings.
Neon’s Unique Offerings
With the integration of Neon, Databricks is poised to accelerate the ease and speed of AI application development. Neon allows users to create PostgreSQL instances—essentially new operational environments of the PostgreSQL database server—in mere seconds. Furthermore, the platform features a disaggregated compute and storage architecture, enabling databases to automatically scale in response to varying workloads. This simplicity in setup not only empowers developers to create new instances effortlessly but also allows agents to be trained to do so, with over 80% of Neon databases reportedly generated by these agents.
As the acquisition progresses, pending due diligence and customary closing conditions, the Neon team, including co-founders Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, will transition to join the ranks of Databricks.
This story will be updated later.
Eric Avidon is a senior news writer for Informa TechTarget and a journalist with more than 25 years of experience. He covers analytics and data management.
