KEY POINTS
Databricks acquires serverless Postgres company Neon for $1B, citing a growing need for databases designed for AI agents and automation.
The deal supports Databricks’ strategy to build a unified AI-native data platform, adding fast, scalable Postgres to its growing stack after MosaicML and Tabular.
"The era of AI-native, agent-driven applications is reshaping what a database must do."
Smarter automation comes with a unicorn valuation as the over-arching SaaS bundling trend continues. Databricks' recent $1 billion acquisition of Neon spotlights the pressing need for database solutions that are quick, scalable, and tailored for autonomy.
Agent-driven data: Databricks noted over 80% of databases set up on Neon are now created by AI agents, not people. "The era of AI-native, agent-driven applications is reshaping what a database must do," said Ali Ghodsi, Co-Founder and CEO at Databricks. The acquisition positions Databricks to make waves in the $100-billion-plus database sector, a market Ghodsi told Reuters is "due for a shakeup" from AI.
Neon's advantage: Neon’s design offers real benefits for AI work, like spinning up separate Postgres instances in "less than half a second" and allowing instant data branching for safe experimentation. Its serverless structure also means costs align with actual use, tackling a common pain point with traditional databases when deploying AI agents. "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 explained in a company statement.
Building a platform: This purchase marks Databricks' third billion-dollar investment in recent years, after MosaicML and Tabular, pointing to a strategy for an all-in-one Data Intelligence Platform for AI. "Four years ago, we set out to build the best Postgres for the cloud that was serverless, highly scalable, and open to everyone," commented Nikita Shamgunov, CEO of Neon. "With this acquisition, we plan to accelerate that mission with the support and resources of an AI giant."
Team and tech forward: Neon’s team of roughly 140 will join Databricks, tasked with pushing Neon's development and weaving its serverless Postgres into the wider Databricks environment. This combination aims to improve how businesses create smart, dependable AI systems. More on this strategy is expected at Databricks' Data + AI Summit in June.
