Databricks, the San Francisco-based data and AI company valued at $62 billion, announced on May 14, 2025, that it has agreed to acquire serverless Postgres database provider Neon in a deal worth approximately $1 billion.
The acquisition represents Databricks' continued expansion in the AI space, following its purchase of AI model training startup MosaicML for $1.3 billion in 2023 and data optimization startup Tabular for over $1 billion in 2024.
Neon, founded in 2021 by a team of experienced database engineers and Postgres contributors, has developed a cloud-based database platform specifically designed to support AI agent workflows. The company's technology can spin up a fully isolated Postgres database in under 500 milliseconds, which is crucial for AI agents that operate at machine speed rather than human pace.
"The era of AI-native, agent-driven applications is reshaping what a database must do," said Ali Ghodsi, Co-Founder and CEO at Databricks. "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."
Neon's serverless architecture offers three key advantages: ultra-rapid provisioning time, elastic scaling with pay-as-you-go pricing, and full compatibility with the Postgres ecosystem. These features make it ideal for AI agents that need to create and manage thousands of isolated database instances cost-effectively.
The acquisition comes as Databricks continues to position itself as a leader in the AI space. The company secured a $62 billion valuation after raising $10 billion in equity financing earlier this year. According to Ghodsi, "pretty much every customer we have wants to leverage agents," but those agents need to be able to build new databases to support their functions, which is where Neon's technology becomes essential.