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Databricks adds Postgres database with $1B Neon acquisition
The vendor's latest purchase comes six months after it raised $10B in funding. By adding PostgreSQL database capabilities, it aims to better enable users to build AI applications.
BREAKING -- Databricks on Wednesday reached an agreement to acquire Neon, developer of a cloud-based dataset platform built on PostgreSQL, in a move aimed at better enabling developers and autonomous AI agents to build applications.
Databricks did not disclose financial terms, but multiple reports value the deal at about $1 billion.
Based in Menlo Park, Calif., Neon is a 2021 PostgreSQL database startup that raised $129.6 million before its acquisition by Databricks.
With the acquisition, Databricks, a San Francisco-based data management vendor that has expanded into AI development, adds open source database capabilities that simplify developing data and AI applications and potentially serve as the underlying database for agentic AI development.
Databricks has made a series of acquisitions over the past two years to build an environment for generative AI development as enterprise interest in developing AI tools has surged.
The vendor's June 2023 acquisition of MosaicML provided the foundation for what is now Mosaic AI while subsequent acquisitions of vendors, including Arcion, Einblick and Lilac AI, all added complementary AI development capabilities. In addition, Databricks' acquisition of BladeBridge added data migration capabilities that aid AI development, and the purchase of Tabular added support for Apache Iceberg tables that can also be used when building AI applications.
Like the purchase of Neon, the acquisitions of MosaicML and Tabular were valued at $1 billion or above. Databricks, however, has raised significant venture capital funding, including $10 billion in December, which has enabled the vendor to strategically buy other companies to add technology.
By acquiring Neon, Databricks adds yet another set of capabilities aimed at making it faster and easier to build AI applications.
Neon enables users to create PostgreSQL instances -- new running environments of the PostgreSQL database server -- in seconds. In addition, with compute and storage separate from one another, Neon databases automatically scale as workloads change. And because they are simple to set up and run, not only can developers create new instances, but also agents can be trained to do so, with more than 80% of Neon databases created by agents, according to Databricks.
Following the acquisition, which remains subject to due diligence and other customary closing conditions, Neon's staff -- including co-founders Nikita Shamgunov, Heikki Linnakangas and Stas Kelvich -- will join 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.
