Databricks to Acquire Neon for $1 Billion, Boosting AI-Driven Database Capabilities

Databricks to buy open-source database startup Neon for $1B | TechCrunch

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 industry veteran CEO Nikita Shamgunov, 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 $129.5 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.

Databricks to acquire open-source database startup Neon to build the next wave of AI agents

Neon can spin up databases in milliseconds, making it ideal for building, and running, agentic AI. Agentic AI requires a whole new type of architecture; traditional workflows create serious gridlock, dragging down speed and performance. Databricks is signaling its intent to get ahead in this next generation of app building, announcing it will purchase open-source serverless Postgres company Neon. The startup's platform can spin up new database instances in less than a second, making it purpose-built to support agentic workflows. This move "allows Databricks to strengthen its AI infrastructure capabilities, specifically in areas like AI-driven database provisioning and the development of AI agents, a notable gap they are seeking to fill as their competitor Snowflake currently lacks these features," said Scott Bickley, advisory fellow at Info-Tech Research Group.

Databricks to buy startup Neon for $1 billion, WSJ reports

May 14 (Reuters) - Databricks has agreed to buy database startup Neon in a deal valued at about $1 billion, the Wall Street Journal reported on Wednesday, as the data analytics company aims to bolster its capabilities in artificial intelligence-powered data management. San Francisco-based Databricks said the deal address a challenge businesses face when deploying AI agents, specifically the speed at which they can link up the necessary data to run their services, the report added. Founded in 2013, Databricks offers a platform designed to help users ingest, analyze and build artificial intelligence applications using complex data from various sources. Neon and Databricks did not immediately respond to Reuters requests for comment. Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology

Databricks Is On An M&A Roll With $1B Neon Acquisition

The planned purchase is one of 13 known acquisitions to date for San Francisco-based Databricks, which looks well-capitalized for more deals going forward. The AI data unicorn raised $10 billion in a late-stage venture funding five months ago at a $62 billion valuation, alongside $5.3 billion in debt financing. With its Neon purchase, Databricks CEO Ali Ghodsi said the company is looking to sharpen its edge in an "era of AI-native, agent-driven applications." Per Ghodsi, a good part of Neon's appeal was that 80% of the databases provisioned on its platform were created automatically by AI agents rather than by humans. Databricks is willing to pay handsomely for that use case. Per Crunchbase data, the Neon purchase appears to be the second-most-expensive 1 to date for Databricks, after its $1.3 billion purchase of generative AI startup MosaicML two years ago. As a startup, Neon also attracted attention and good-sized checks from venture and strategic investors. Founded in 2021, the Silicon Valley company raised about $130 million in known venture funding to date, with lead investors including Microsoft's M12 and Menlo Ventures. For Databricks, the Neon acquisition comes amid a period of sharp growth. Per a CNBC report posted on the company's website, annualized revenue is expected to reach $2.4 billion by the midpoint of this year. The company also projects that annualized sales for the first half of this year will be up 60% from a year earlier. Databricks' purchase of Neon isn't a done deal yet, as it will require regulatory approval.

Databricks to Acquire Database Startup Neon for $1 Billion | AIM

Databricks has announced its plan to acquire Neon, a leading serverless Postgres provider, for $ 1 billion. Neon's offering is designed to support AI agents, a key element in modern development workflows. According to recent data, over 80% of databases created on Neon are provisioned automatically by AI agents, rather than humans. "The era of AI-native, agent-driven applications is reshaping what a database must do," said Ali Ghodsi, co-founder and CEO at Databricks in a company statement. "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's platform allows for rapid database spin-up, with Postgres instances created in under 500 milliseconds, while offering cost scalability and full compatibility with the open-source Postgres ecosystem. Neon is a cloud-native, serverless PostgreSQL database designed for developers and AI-driven apps. Launched in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, it separates storage and compute for instant provisioning, auto-scaling, and branching. This approach allows developers to quickly spin up isolated environments for rapid testing and iteration. Databricks aims to integrate Neon's technology with its Data Intelligence Platform, addressing AI workload bottlenecks. The acquisition will help Databricks to provide developers with a serverless, scalable Postgres platform suited for AI applications. "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," said Neon CEO Shamgunov. Neon's team will join Databricks after the acquisition, continuing to support its community. This move is set to transform the $100-billion-plus database market, which is experiencing significant disruption due to AI advancements. Similarly, Databricks acquired Fennel last month, an engineering platform, to support customers in iterating on features, improving model performance with reliable signals. Last year, Databricks' acquired Tabular, a data management startup founded by Ryan Blue, Daniel Weeks, and Jason Reid for $1 billion.

Databricks buys serverless database startup Neon for reported $1B - SiliconANGLE

Databricks buys serverless database startup Neon for reported $1B Confirming recent rumors, Databricks Inc. today announced that it's acquiring Neon Inc. to enhance its cloud data platform. The Wall Street Journal reported that the deal is worth about $1 billion. San Francisco-based Databricks received a $62 billion valuation after its most recent funding round last year. The company's namesake platform enables organizations to store data, analyze it and use it to power artificial intelligence workloads. The software has been adopted by more than 60% of the Fortune 500. Neon, in turn, is a venture-backed startup with a managed cloud database. It raised more than $130 million in funding prior to the acquisition from Microsoft Corp.'s M12 fund and other backers. Neon's platform is based on PostgreSQL, one of the industry's most popular open-source relational databases. The company has replaced PostgreSQL's storage engine, the component that holds users' records, with an internally-developed technology. Neon says that its customized implementation of the database is easier to manage and performs certain tasks faster. The company's storage engine is powered by a component of PostgreSQL called the write-ahead log, or WAL. If an outage occurs while users try to add a record to a PostgreSQL database, the record might be saved in an incomplete form or not at all. The WAL module is designed to avoid such technical issues. When users add a record to a PostgreSQL database, the record is not sent directly to the database but rather saved to the WAL first. This creates a backup copy of the record. If a crash interrupts a data write operation, the affected data can be recovered from the WAL. Neon's custom storage engine implements the WAL as a cluster of servers spread across multiple data centers. When users add a record to Neon, the record is first sent to the WAL, which saves it to disk. The file is subsequently moved to servers called Pageservers that hold it in an immutable format, which means it can't be edited. The Pageservers are responsible for making files available to the applications that use a Neon database. Neon's architecture makes it possible to launch new database instances in under a second. That capability lends itself well to powering AI agents, which was one of the factors behind Databricks' decision to swoop in. The company will integrate Neon's technology into its cloud data platform to help customers run AI agents. Many of the tasks for which programming-optimized AI agents are used require launching a database. Usually, the process takes several minutes, which means generating prompt responses takes that much longer. Neon's ability to launch database instances in under a second allows AI agents to respond to user requests faster. The platform also eases certain related tasks. When multiple AI agents use information from the same database instance, the database can become overwhelmed with requests. Developers can use Neon to quickly create a separate copy of a database's contents for each AI agent. "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," said Databricks co-founder and Chief Executive Officer Ali Ghodsi. Databricks expects to complete the acquisition by July 31.

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. Microsoft is laying off 3% of its workforce: 6,500 jobs gone 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.

Databricks continues M&A spree, will buy Neon for $1 billion in AI-agent push

Demand for AI agents, programs that need little human intervention in executing routine tasks such as writing code or sending emails, has been growing as companies embrace the new technology to automate workflows and improve efficiency, creating demand for Neon's specific databases that are optimized for AI agents. Databricks said on Wednesday it would buy database startup Neon in its latest deal valued at about $1 billion, aiming to strengthen its analytics platform with technology that can help businesses develop and use artificial intelligence agents more easily. Demand for AI agents, programs that need little human intervention in executing routine tasks such as writing code or sending emails, has been growing as companies embrace the new technology to automate workflows and improve efficiency, creating demand for Neon's specific databases that are optimized for AI agents. Neon's cloud-based platform, based on the PostgreSQL open-source database - a system for organizing and managing information online - helps developers and AI agents store, access and manage data in real-time, making it easier to build and deploy AI-powered applications. Databricks, which is also an investor in Neon, sees the opportunity to own the newly built database as a way to attract more enterprises using its platform to build agents. The database market is due for a shakeup in the next few years, Databricks CEO Ali Ghodsi told Reuters. "The disruption will be with AI. We would love to own a chunk of that." Founded in 2021, Neon has partnered with platforms such as Vercel, Replit, Cloudflare, GitHub and Microsoft to integrate its serverless PostgreSQL offering into widely used developer tools and platforms. It has raised nearly $130 million from investors including General Catalyst and Notable Capital, according to PitchBook. Databricks said Neon's team is expected to join the data analytics company after the transaction closes. San Francisco, California-based Databricks, which secured a $62 billion valuation after raising a whopping $10 billion last year, offers a platform designed to help users ingest, analyze and build AI applications using complex data from various sources. One of the most highly valued private companies in the world, it competes with Snowflake and is widely seen as a public listing candidate. Databricks used its valuable private shares to acquire generative AI startup MosaicML in a $1.3-billion deal in 2023 and last year said it would buy data-management startup Tabular for more than $1 billion. More than 10,000 organizations, including Comcast, Block, Rivian and Shell, rely on the company's Databricks Data Intelligence Platform to manage and analyze data for AI applications, according to the company's website.

Databricks $1B Neon Buy To Build World's 'Best Postgres' Tech, CEOs Explain

'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,' says Databricks CEO Ali Ghodsi. Databricks is acquiring database startup Neon, which specializes in serverless Postgres, for $1 billion with the goal of helping businesses eliminate data silos, simplify architecture and build better AI agents. "The era of AI-native, agent-driven applications is reshaping what a database must do," said Databricks CEO Ali Ghodsi in a statement. "Neon proves it: Four out of every five databases on their platform are spun up by code, not humans." By acquiring San Francisco-based Neon, Databricks looks to give developers serverless Postgres technology that can "keep up with agentic speed, pay-as-you-go economics and the openness of the Postgres community," Ghodsi said. [Related: Databricks Wraps Up $15B Financing Round, Adds Meta As A 'Strategic Investor'] The move comes as Databricks wrapped up a $15 billion financing round this year. Currently, over 80 percent of the databases provisioned on Neon were created automatically by AI agents. "In 2024, something shifted: AI-native apps started taking off. And we realized that our architecture was uniquely well-suited to power them," Neon CEO Nikita Shamgunov said in a blog post Wednesday. "We leaned into agent-focused development, and within a few months, over 80 percent of databases were being created by AI agents rather than humans." Neon's CEO said the ultimate goal of merging with Databricks is to "build the best Postgres experience in the world" and one of the most important pieces of the modern AI-native app stack. Founded in 2021, Neon began as a Database-as-a-Service startup that provided a fully managed serverless Postgres database service targeting developers. Neon made CRN's 10 Hottest Big Data Startups list in 2022. In 2023, the startup introduced the Neon Partner Program, followed soon after by a $46 million Series B funding round. Over time, Neon became one of the fastest-growing developer databases on the market, said Shamgunov. The Neon platform automatically scales processor, memory and storage according to usage, and supports branching along with point-in-time recovery. "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," said Shamgunov in a statement Wednesday. "Databricks was founded by open-source pioneers committed to making it easier for developers to work with data and AI at any scale." Together, Databricks and Neon will work to remove traditional limitations of databases that require compute and storage to scale in tandem. The integration of Neon's serverless Postgres architecture with the Databricks Data Intelligence Platform will help developers and enterprise teams more efficiently build and deploy AI agent systems. When completed, the joint company's approach will not only prevent performance bottlenecks from thousands of concurrent agents, but also simplify infrastructure, reduce costs and accelerate innovation, according to Databricks. "Our roadmap is accelerating, and our ambition is only growing," said Neon's CEO. "The Neon journey has been an incredible ride so far. But the truth is, we're just getting started."

Databricks Boosts AI Agent Business With $1 Billion Neon Purchase | PYMNTS.com

Data and artificial intelligence (AI) firm Databricks is acquiring database startup Neon. "As the $100-billion-plus database market braces for unprecedented disruption driven by AI, Databricks plans to continue innovating and investing in Neon's database and developer experience for existing and new Neon customers and partners," the company said in a Wednesday (May 14) news release. While the company did not list a dollar amount for the acquisition, a report by The Wall Street Journal (WSJ) values the deal at around $1 billion. Databricks notes in its release that AI agents are becoming increasingly important to modern developers, adding that Neon is "purpose-built to support their agentic workflows." Recent in-house telemetry showed that more than 80% of the databases provisioned on Neon were created automatically by AI agents and not by humans, underlining the explosive growth of agentic workloads. "The era of AI-native, agent-driven applications is reshaping what a database must do," Databricks Co-founder and CEO Ali Ghodsi said in the release. "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," Ghodsi added, referring to the PostgreSQL open-source database. Speaking to the WSJ, Ghodsi said that "pretty much every customer we have wants to leverage agents." However, those agents need to be able to build new databases to support what they do, which is where Neon comes in. Databricks was valued at $62 billion earlier this year in a Series J funding round, taking in $10 billion in equity financing along with a $5.25 billion credit facility from several banking giants. Meanwhile, PYMNTS wrote earlier this week about the rise of the agentic AI web experience, arguing that it "could mark a transformative period in how users access and interact with information online." At the center of this potential evolution are large language models (LLMs) such as OpenAI's GPT-4, Google's Gemini, and Anthropic's Claude. These systems are increasingly able to understand context, maintain memory, and execute multi-step tasks. Still, true agency requires integration, not just linguistic prowess. Application programming interfaces (APIs) now act as conduits that let AI agents interact with apps, services and devices. "For businesses, agentic AI presents a double-edged sword," that report said. "On one hand, it might open new avenues for customer engagement, operational efficiency and product innovation. On the other, it may also threaten to disrupt long-standing business models."

Databricks Agrees to Acquire Neon to Deliver Serverless Postgres for Developers + AI Agents

Neon: An Open, Serverless Foundation for Developers and AI Agents are becoming increasingly integral components for modern developers, and Neon is purpose-built to support their agentic workflows. Recent internal telemetry showed that over 80 percent of the databases provisioned on Neon were created automatically by AI agents rather than by humans, underscoring how explosively agentic workloads are growing. These workloads differ from human-driven patterns in three important ways: 1. Speed + flexibility: Agents operate at machine speed and traditional database provisioning often becomes a bottleneck -- Neon can spin up a fully isolated Postgres instance in 500 milliseconds or less and supports instant branching and forking of not only database schema but also data, so experiments never disturb production. 2. Cost proportionality: Agents demand a cost structure that scales precisely with usage -- Neon's full separation of and storage keeps the total cost of ownership for thousands of ephemeral databases proportional to the queries they actually run. 3. Open source ecosystem: Agents expect to leverage the rich Postgres community -- Neon is 100 percent Postgres-compatible and works out of the box with popular extensions. "The era of AI-native, agent-driven applications is reshaping what a database must do," said Ali Ghodsi, Co-Founder and CEO at . "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."

Databricks to buy startup Neon for $1 billion, WSJ reports

(Reuters) - Databricks has agreed to buy database startup Neon in a deal valued at about $1 billion, the Wall Street Journal reported on Wednesday, as the data analytics company aims to bolster its capabilities in artificial intelligence-powered data management. San Francisco-based Databricks said the deal address a challenge businesses face when deploying AI agents, specifically the speed at which they can link up the necessary data to run their services, the report added. Founded in 2013, Databricks offers a platform designed to help users ingest, analyze and build artificial intelligence applications using complex data from various sources. Neon and Databricks did not immediately respond to Reuters requests for comment. (Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)

Databricks to buy startup Neon for $1 billion

(Reuters) - Databricks said on Wednesday it has agreed to buy database startup Neon in a deal valued at about $1 billion, as the data analytics company aims to bolster its capabilities in AI-powered data management. San Francisco-based Databricks said the deal address a challenge businesses face when deploying AI agents, specifically the speed at which they can link up the necessary data to run their services. Databricks, which secured a $62 billion valuation after raising a whopping $10 billion last year, offers a platform designed to help users ingest, analyze and build artificial intelligence applications using complex data from various sources. (Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)