Databricks acquires serverless database startup Neon for $1B to boost AI agent development

Databricks is opening its wallet again. The San Francisco-based data analytics startup announced Wednesday that it’s acquiring Neon, a serverless database startup, in a deal valued at around $1 billion.

The move is aimed at making it easier for developers and companies to build AI agents, software programs that can handle tasks like writing code or sending emails without constant human input.

“We are excited to announce that we have agreed to acquire Neon, a developer-first, serverless Postgres company. Neon’s co-founders are among the very few people in the world who could re-architect Postgres with true separation of storage and compute, built for modern developers and AI systems,” Databricks said in a statement.

The news of the acquisition comes less than a month after Databricks announced a $250 million AI investment to grow its workforce in India by over 50%, aiming to push its headcount past 750 employees by the end of the fiscal year.

Databricks Buys Neon in $1B Deal to Power AI Agents with Serverless PostgreSQL

Neon brings to the table a cloud-native platform built on PostgreSQL, the popular open-source database. The idea is simple: give developers and AI agents a faster, more flexible way to access and manage data in real time. This could smooth out a lot of the friction companies face when deploying AI-driven applications.

“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,” said Databricks CEO Ali Ghodsi.

Founded in 2021, Neon has already struck integrations with big names like Vercel, Replit, Cloudflare, GitHub, and Microsoft, making it easier for developers to plug into familiar tools and workflows.

After the deal closes, Neon’s team will join Databricks. No timeline was given for when that’ll happen. “This acquisition will give us the scale and backing to accelerate our mission,” Neon’s founders said in a blog post.

Databricks, which last raised $10 billion at a $62 billion valuation, is clearly on a buying streak. Just last year, it picked up generative AI startup MosaicML in a $1.3 billion stock deal and later scooped up data-management startup Tabular for more than $1 billion.

The company says over 10,000 organizations—including Comcast, Block, Rivian, and Shell—use its Data Intelligence Platform to wrangle complex data and build AI applications.

Neon fits right into that strategy, adding a piece Databricks believes will help developers build smarter tools without getting bogged down by infrastructure.