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.

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.

Who Is Neon?

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.”

Databricks’ Plan For Neon After Acquisition Close

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.”

The deal is expected to close later this year.