Databricks is making another big move in its AI strategy, announcing it will acquire open-source database startup Neon in a $1 billion deal. The acquisition aims to fuse Neon’s cutting-edge, serverless Postgres system with Databricks’ unified data intelligence platform—paving the way for faster, more scalable AI agent deployments.
Neon, founded in 2021 by CEO Nikita Shamgunov along with engineers Heikki Linnakangas and Stas Kelvich, has built a developer-first cloud database that’s becoming increasingly vital in the AI era. Its platform offers serverless autoscaling for compute and storage, point-in-time recovery, and unique branching features—allowing developers to instantly clone databases and test changes in isolated environments.
But what truly sets Neon apart is how it supports the speed and autonomy of AI agents. Databricks shared internal telemetry showing that 80% of the databases created on Neon were provisioned automatically by AI agents—not by humans. That level of automation underlines a shift in how modern apps, powered by autonomous agents, interact with infrastructure.
Ali Ghodsi, co-founder and CEO of Databricks, emphasized the changing nature of software development in a statement. He noted that the era of agent-driven applications is reshaping databases, and Neon’s ability to keep up with agentic workflows makes it an ideal fit. “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,” he said.
Neon currently offers both free and usage-based paid plans. Its simplicity, scalability, and open-source roots have made it a go-to tool for modern dev teams building AI-native systems. The startup has raised $129.5 million to date, with backers including Microsoft’s M12, Menlo Ventures, General Catalyst, and Notable Capital.
This latest deal adds to Databricks’ aggressive M&A spree in the AI infrastructure space. Just last year, the company spent nearly $2 billion acquiring Tabular to strengthen its data lakehouse stack. It also bought MosaicML, known for its open-source platform for training large language models, for $1.3 billion in 2023.
Databricks, now valued at $62 billion, has raised more than $19 billion in capital. With this latest Neon acquisition, it’s clear the company isn’t just chasing the AI trend—it’s building the back-end ecosystem that will define it.
