Databricks Is in Talks to Acquire Database Start-up Neon. The Deal Could Be Worth Over $1 Billion, Although No Definitive Agreement Has Been Reached Yet.
According to sources that Upstarts Media has spoken with, the acquisition talks are in an advanced stage. Some insiders claim that the deal is nearly complete, while others emphasize that the agreement could still fall through. Neon, headquartered in San Francisco, has raised over $130 million since its inception. Microsoft’s investment fund M12 is among the leading investors.
The start-up is developing a commercial variant of the open-source PostgreSQL database. The software operates serverlessly, meaning customers don’t need to manage their own infrastructure. Neon automatically scales up or down, depending on the application’s needs. Storage and processing capacity can be added separately, which is often not possible in traditional systems. This allows companies to better manage hardware costs.
Neon also utilizes connection pooling. This technique keeps active network connections to the database ready, allowing new requests to be processed faster. The software further includes functions to shield data down to the row level and offers possibilities for recovery after data loss due to errors or attacks.
Appeal for AI applications
Databricks is reportedly interested in Neon due to its added value for AI developments. For instance, the database supports vector storage, an essential component in processing AI information. New databases can be started within a second, which is relevant for AI tools such as programming assistants.
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In recent years, Databricks has acquired several start-ups to expand its AI offerings. In April, it purchased Fennel AI, a developer of data processing tools. Earlier acquisitions included Tabular, Lilac AI, and MosaicML, which focus on data management and large language models. At the beginning of this year, Databricks raised $10 billion. Last month, it asked for Claude’s hand from Anthropic.
The potential acquisition of Neon fits within this strategy. Whether the deal will actually go through remains unclear for now.