Databricks buys open-source database startup Neon for $1B
Databricks, a leading data and AI platform, has announced the acquisition of Neon, a fast-growing startup developing a serverless, open-source alternative to AWS Aurora Postgres. The deal, reportedly worth around $1 billion, marks Databricks’ latest strategic move to strengthen its capabilities in supporting AI-native applications.
Founded in 2021 by former engineers from Amazon, Microsoft, and Citus Data, Neon has quickly established itself as a cutting-edge provider of cloud-native Postgres infrastructure. Its platform allows developers to create, clone, and test databases with ease, offering features like branching, point-in-time recovery, and automatic scaling of compute and storage—all with a usage-based pricing model.
According to Databricks, the acquisition is a step toward enabling the next generation of AI applications, which are increasingly built and operated by autonomous agents. These agents, unlike traditional developers, demand backend systems that can respond instantly, scale seamlessly, and operate at high velocity.
Telemetry shared by Databricks underscores this shift: 80% of databases provisioned on Neon's platform were created automatically by AI agents, not humans. This trend points to a fundamental evolution in how modern software is built and deployed.
“The era of AI-native, agent-driven applications is reshaping what a database must do,” said Databricks CEO Ali Ghodsi. “Neon proves it: four out of every five databases on their platform are spun up by code, not humans. 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.”
For Databricks, the deal fits neatly into a broader strategy to become the dominant platform for developing and deploying AI systems. The company has spent aggressively in recent years, acquiring MosaicML in 2023 for $1.3 billion to expand its generative AI capabilities and Tabular in 2024 to boost its data governance and lakehouse architecture.
Neon, backed by high-profile investors including Microsoft’s M12, General Catalyst, Menlo Ventures, and Notable Capital, has raised nearly $130 million to date. Its open-source foundations and developer-first approach align well with Databricks’ open ecosystem philosophy.
The acquisition is expected to deepen Databricks’ ability to offer end-to-end solutions for AI-driven applications—from data ingestion and management to model training and deployment—while providing developers with a powerful, scalable, and flexible database engine built for the age of autonomous agents.
As the AI landscape matures, Databricks' purchase of Neon signals a clear bet: that the future of data infrastructure will be serverless, open-source, and optimized for machines, not just humans.
