Data analytics firm Databricks revealed it would be buying Neon, a cloud-based database software vendor, for about $1 billion in an announcement on Wednesday. It is expected that this deal would make Databricks more attractive to businesses that want to create their own AI bots.
“Pretty much every customer we have is super excited and wants to leverage agents,” said Databricks Co-Founder and CEO Ali Ghodsi, referring to the autonomous bots that can make decisions and perform tasks on behalf of humans. This however, comes with the problem of bots needing to be able to create new databases to support what they do.
Neon is a cloud-based database platform that developers—and AI bots—use when building apps and websites. It is based on the popular open-source database PostgreSQL, a relational database that dates back to the late 1980s.
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Following this deal, Neon would serve as the underlying database for customers that create AI agents with data they store in Databricks’ platform. Databricks makes money by renting out analytics capabilities, AI and other cloud-based software that taps AI-ready data for building enterprise tech systems.
Once the deal closes, Neon’s roughly 140 employees will join Databricks.
This is the latest big deal for Databricks, which previously bought artificial intelligence model training startup MosaicML for $1.3 billion back in 2023 and paid more than $1 billion last year for data optimization startup Tabular.
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The Neon deal ensures that Databricks is about to join the ranks of tech giants including Nvidia and OpenAI that have recently released their own platforms for customers to build AI agents.
“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 Nikita Shamgunov, CEO of Neon. “Databricks was founded by open source pioneers committed to making it easier for developers to work with data and AI at any scale. Together, we are starting a new chapter on an even more ambitious journey.”
To actually create an AI agent isn’t that easy, and requires a combination of tools or even building something from scratch, said Amjad Masad, founder and CEO of app development startup Replit, a Databricks and Neon customer. “Right now, there’s no place to be able to track the entire trajectory of software development agents,” Masad said, adding that Databricks’ Neon acquisition will make it easier for Replit to manage its agent-building capabilities.