Databricks is reportedly in advanced talks to acquire Neon, a startup that offers a commercial version of the open-source PostgreSQL database.
According to sources at tech publication Upstarts Media, negotiations are at an advanced stage. Some of those involved indicate that the deal is practically done, although others emphasize that it could still fall through. The acquisition would be worth more than $1 billion.
Neon, based in San Francisco, has raised more than $130 million from investors, including Microsoft’s M12 fund. The main selling point of Neon’s PostgreSQL version is its serverless architecture, which means customers do not have to worry about managing the underlying infrastructure.
Neon’s software automatically scales the required hardware up or down depending on the workload. Storage capacity and computing power can be allocated separately, which is more efficient than in some older systems where both have to be added at the same time—often resulting in unnecessary costs.
With traditional databases, setting up a network connection to an application requires additional hardware and can slow down performance. Neon has a solution for this: ‘connection pooling’, whereby connections are set up in advance and can be used immediately. This reduces the load on the system.
Advanced security tool
PostgreSQL is a relational database, which means that data is stored in rows and columns. Neon also offers a security tool that allows companies to determine in detail which users have access to which rows of data. If something goes wrong—such as a human error or ransomware attack—administrators can restore the database to a previous state.
Databricks’ interest in Neon is likely related to applications in the field of artificial intelligence. Neon’s database supports the storage of vectors—the mathematical structures in which AI models store information. In addition, the system can launch a new database instance within one second, which Neon says is ideal for AI tools for programmers. The faster such an assistant can access a database, the faster the answer can follow.
Over the past two years, Databricks has acquired several startups to expand its AI capabilities. Last month, it bought Fennel AI, a company that automates data flows for AI applications. Earlier, it also acquired Lilac AI, which specializes in AI datasets, and MosaicML Inc., a developer of large language models. The latter deal is said to have cost around $1.3 billion.