Databricks has confirmed the $1 billion acquisition of Neon, an open-source cloud database startup that’s building a serverless alternative to AWS Aurora Postgres. The deal brings Neon’s cutting-edge technology under the Databricks umbrella, with a clear goal: to supercharge the performance and flexibility of AI agent deployments.
Neon’s database platform is designed with automation and scalability at its core. It allows developers to clone databases, preview changes before pushing to production, and recover data with point-in-time accuracy. The system also supports branching—ideal for testing environments—and dynamically adjusts processing power, memory, and storage based on usage.
What sets Neon apart is how well it serves AI workloads. Databricks shared that 80% of all databases provisioned on Neon are created not by humans, but by AI agents. That stat highlights a major shift in how modern applications are built, tested, and deployed.
Fueling the Rise of Agentic AI Workflows
With the deal, Databricks aims to deliver a high-speed, serverless Postgres experience optimized for AI-native applications. CEO Ali Ghodsi emphasized that Neon’s architecture aligns perfectly with the demands of “agent-driven” development—where code, not people, spins up infrastructure. This approach helps developers keep pace with faster iteration cycles and scale AI tools with greater cost-efficiency.
Neon was founded in 2021 by CEO Nikita Shamgunov alongside engineers Heikki Linnakangas and Stas Kelvich. The startup has raised $129.6 million to date, backed by top-tier firms like Microsoft’s M12, General Catalyst, Menlo Ventures, and Notable Capital. Its platform is available under a freemium model, with free and usage-based paid plans.
This move is the latest in a series of major acquisitions by Databricks. Last year, it acquired MosaicML, a platform for training large language models, for $1.3 billion. More recently, it snapped up Tabular for nearly $2 billion to enhance its data management stack.
Now valued at $62 billion and armed with $19B+ in funding, Databricks is aggressively cementing its role in the AI infrastructure race. With Neon, the company is betting that developer-first, open-source systems—especially those built for agentic workflows—will define the next era of enterprise AI.
