Data and AI company Databricks has set its sights on expanding its capabilities by announcing its intent to acquire Neon, a cloud-based serverless Postgres platform, in a transaction valued at approximately USD 1 billion. This strategic move is poised to enhance Databricks’ infrastructure for AI-native applications and agent-based workloads.
Neon’s Innovative Offerings
Founded in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, Neon provides a managed, open-source Postgres service tailored for cloud and AI applications. The platform boasts features that enable developers to:
- Clone databases effortlessly
- Test changes in isolated environments
- Restore data from any point in time
Neon’s architecture is designed to automatically scale compute, memory, and storage resources, offering a pay-as-you-go model that aligns seamlessly with the dynamic requirements of ephemeral, AI-generated databases. Recent statistics reveal that over 80% of databases provisioned on Neon are created by AI agents, underscoring a transformative shift in application development and deployment in the AI landscape.
Comments from Leadership
Ali Ghodsi, Co-founder and CEO of Databricks, emphasized the significance of this acquisition, stating, “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. 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.”
Integration and Future Prospects
The integration of Neon’s architecture is expected to enhance Databricks’ existing Data Intelligence Platform by enabling developers to create isolated Postgres instances in under 500 milliseconds. This capability supports branching and forking at both the schema and data levels, facilitating experimentation without disrupting production environments.
Databricks aims to address traditional database constraints that link compute and storage, a limitation viewed as incompatible with the elastic demands of AI agents. By decoupling these components, the collaboration is anticipated to yield lower latency, reduced costs, and simplified infrastructure management for organizations scaling AI systems.
Statements from Neon’s Leadership
Nikita Shamgunov, CEO of Neon, remarked on the acquisition, stating, “Four years ago, we set out to build the best Postgres for the cloud that was serverless, highly scalable, and open to everyone. With this acquisition, we plan to accelerate that mission with the support and resources of an AI giant. Databricks was founded by open-source pioneers committed to making it easier for developers to work with data and AI at any scale. Together, we are starting a new chapter on an even more ambitious journey.”
Next Steps and Community Engagement
Upon finalization of the acquisition, which is subject to regulatory approvals and standard closing conditions, Neon’s team is expected to join Databricks, continuing their work on the database platform while actively engaging with their developer community. Further details will be unveiled at the upcoming Data + AI Summit in San Francisco, scheduled for June 9–12.
Neon has successfully raised USD 129.5 million from notable investors, including Microsoft’s M12, Menlo Ventures, General Catalyst, and Notable Capital. In contrast, Databricks has secured over USD 19 billion in funding to date, including a significant USD 15.3 billion round earlier this year, elevating its valuation to USD 62 billion. Recent acquisitions by Databricks, such as Tabular and MosaicML, reflect its aggressive expansion into the AI and data infrastructure market.
Databricks to Acquire Neon in USD 1 Billion Deal to Power AI Agent Workflows with Serverless Postgres
Data and AI company Databricks has set its sights on expanding its capabilities by announcing its intent to acquire Neon, a cloud-based serverless Postgres platform, in a transaction valued at approximately USD 1 billion. This strategic move is poised to enhance Databricks’ infrastructure for AI-native applications and agent-based workloads.
Neon’s Innovative Offerings
Founded in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, Neon provides a managed, open-source Postgres service tailored for cloud and AI applications. The platform boasts features that enable developers to:
Neon’s architecture is designed to automatically scale compute, memory, and storage resources, offering a pay-as-you-go model that aligns seamlessly with the dynamic requirements of ephemeral, AI-generated databases. Recent statistics reveal that over 80% of databases provisioned on Neon are created by AI agents, underscoring a transformative shift in application development and deployment in the AI landscape.
Comments from Leadership
Ali Ghodsi, Co-founder and CEO of Databricks, emphasized the significance of this acquisition, stating, “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. 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.”
Integration and Future Prospects
The integration of Neon’s architecture is expected to enhance Databricks’ existing Data Intelligence Platform by enabling developers to create isolated Postgres instances in under 500 milliseconds. This capability supports branching and forking at both the schema and data levels, facilitating experimentation without disrupting production environments.
Databricks aims to address traditional database constraints that link compute and storage, a limitation viewed as incompatible with the elastic demands of AI agents. By decoupling these components, the collaboration is anticipated to yield lower latency, reduced costs, and simplified infrastructure management for organizations scaling AI systems.
Statements from Neon’s Leadership
Nikita Shamgunov, CEO of Neon, remarked on the acquisition, stating, “Four years ago, we set out to build the best Postgres for the cloud that was serverless, highly scalable, and open to everyone. With this acquisition, we plan to accelerate that mission with the support and resources of an AI giant. Databricks was founded by open-source pioneers committed to making it easier for developers to work with data and AI at any scale. Together, we are starting a new chapter on an even more ambitious journey.”
Next Steps and Community Engagement
Upon finalization of the acquisition, which is subject to regulatory approvals and standard closing conditions, Neon’s team is expected to join Databricks, continuing their work on the database platform while actively engaging with their developer community. Further details will be unveiled at the upcoming Data + AI Summit in San Francisco, scheduled for June 9–12.
Neon has successfully raised USD 129.5 million from notable investors, including Microsoft’s M12, Menlo Ventures, General Catalyst, and Notable Capital. In contrast, Databricks has secured over USD 19 billion in funding to date, including a significant USD 15.3 billion round earlier this year, elevating its valuation to USD 62 billion. Recent acquisitions by Databricks, such as Tabular and MosaicML, reflect its aggressive expansion into the AI and data infrastructure market.