Databricks continues M&A spree, will buy Neon for $1 billion in AI-agent push 

Databricks said it would buy database startup Neon in its latest deal valued at about $1 billion, to help businesses develop and use AI agents more easily.

Databricks said on Wednesday it would buy database startup Neon in its latest deal valued at about $1 billion, aiming to strengthen its analytics platform with technology that can help businesses develop and use artificial intelligence agents more easily.

Demand for AI agents, programs that need little human intervention in executing routine tasks such as writing code or sending emails, has been growing as companies embrace the new technology to automate workflows and improve efficiency, creating demand for Neon's specific databases that are optimized for AI agents.

Neon's cloud-based platform, based on the PostgreSQL open-source database - a system for organizing and managing information online - helps developers and AI agents store, access and manage data in real-time, making it easier to build and deploy AI-powered applications. Databricks, which is also an investor in Neon, sees the opportunity to own the newly built database as a way to attract more enterprises using its platform to build agents.

The database market is due for a shakeup in the next few years, Databricks CEO Ali Ghodsi told Reuters.

"The disruption will be with AI. We would love to own a chunk of that." Founded in 2021, Neon has partnered with platforms such as Vercel, Replit, Cloudflare, GitHub and Microsoft to integrate its serverless PostgreSQL offering into widely used developer tools and platforms. It has raised nearly $130 million from investors including General Catalyst and Notable Capital, according to PitchBook.

Databricks said Neon's team is expected to join the data analytics company after the transaction closes. San Francisco, California-based Databricks, which secured a $62 billion valuation after raising a whopping $10 billion last year, offers a platform designed to help users ingest, analyze and build AI applications using complex data from various sources. One of the most highly valued private companies in the world, it competes with Snowflake and is widely seen as a public listing candidate. Databricks used its valuable private shares to acquire generative AI startup MosaicML in a $1.3-billion deal in 2023 and last year said it would buy data-management startup Tabular for more than $1 billion.

More than 10,000 organizations, including Comcast, Block, Rivian and Shell, rely on the company's Databricks Data Intelligence Platform to manage and analyze data for AI applications, according to the company's website.