Databricks Set to Acquire Open Source Innovator Neon for $1 Billion
In a significant move to enhance its capabilities in the realm of AI, data analytics powerhouse Databricks has announced its intention to acquire Neon, a rising star known for developing an open-source alternative to AWS Aurora Postgres, for approximately $1 billion.
This acquisition aims to integrate Neon’s cutting-edge serverless relational database management system with Databricks’ advanced data intelligence services, paving the way for a more streamlined deployment of AI agents. The synergy between their technologies promises to unlock new efficiencies for customers navigating the increasingly complex landscape of artificial intelligence.
Founded in 2021 by CEO Nikita Shamgunov, along with engineers Heikki Linnakangas and Stas Kelvich, Neon has quickly made a name for itself with its managed, cloud-based database platform. Offering both free and usage-based plans, the platform allows developers to clone databases and test changes prior to rolling them out into live environments. Notably, it features automatic scaling of processing power, memory, and storage, alongside innovative functionalities like branching for isolated testing and point-in-time recovery.
Databricks highlights that these features align perfectly with the needs of AI agents, which operate at a speed that surpasses human developers yet require oversight to minimize errors. Recent telemetry data reveals a striking statistic: 80% of databases provisioned on Neon have been automatically generated by these AI agents rather than human intervention.
“The rise of AI-driven applications is fundamentally transforming the functionalities required of a database,” stated Ali Ghodsi, co-founder and CEO of Databricks. “Neon exemplifies this shift: four out of five databases on their platform are initiated by code instead of human hands. By integrating Neon into our ecosystem, we’re delivering a serverless Postgres solution that can match the speed of AI-driven processes, offer cost-effective pricing, and embrace the openness characteristic of the Postgres community.”
Neon has successfully garnered $129.6 million in funding, with backers that include Microsoft’s M12, General Catalyst, Menlo Ventures, and Notable Capital. Databricks itself boasts an impressive financing total exceeding $19 billion, having recently secured $15.3 billion at a valuation of $62 billion.
In its aggressive pursuit of leveraging the AI surge, Databricks has made a series of strategic acquisitions. Last summer, the company added data management firm Tabular for nearly $2 billion, and earlier this year, it acquired MosaicML, a platform focused on training large language models and deploying AI tools, for $1.3 billion.
As the landscape of data management and artificial intelligence continues to evolve, this acquisition positions Databricks at the forefront of innovation, prepared to deliver pioneering solutions that enhance productivity and reliability for developers worldwide.