Databricks in Talks to Acquire Database Startup Neon for $1 Billion

Databricks is in talks to acquire San Francisco-based database startup Neon, which rents access to a cloud database service designed for AI agents and applications, for around $1 billion, according to The Information. 

The acquisition aims to get users to build AI agents that can handle multi-step tasks, such as planning trips and organising product returns. While the potential deal is valued at $1 billion, the total amount could exceed this figure once employee retention packages are included, AIM Research reported. The deal appears to be finalised, but discussions are ongoing, and it may still fall through.

Neon’s services are based on open-source PostgreSQL software, which lets customers pay for short periods of database usage—sometimes as short as several seconds. According to reports, this makes Neon one of the most cost-effective options for customers using AI agents in businesses to create new databases and use them for brief periods to carry out different tasks. 

In March this year, Databricks and Anthropic announced a five-year partnership to offer Anthropic models and services through the Databricks data intelligence platform. Within this partnership, the two companies would provide Claude AI models directly to their customers, highlighting an easier way for users to build AI agents. 

Similarly, Databricks acquired Fennel last month, an engineering platform, to support customers in iterating on features, improving model performance with reliable signals, and providing GenAI models with personalised and real-time context without any overhead and cost of managing complex infrastructure. 

Acquiring Neon would give Databricks direct possession of a contemporary, AI-focused transactional database and enhance its infrastructure layer even further.