Databricks Is On An M&A Roll With $1B Neon Acquisition

Databricks announced Wednesday that it will acquire database management platform Neon in a deal reportedly valued at around $1 billion.

The planned purchase is one of 13 known acquisitions to date for San Francisco-based Databricks, which looks well-capitalized for more deals going forward. The AI data unicorn raised $10 billion in a late-stage venture funding five months ago at a $62 billion valuation, alongside $5.3 billion in debt financing.

With its Neon purchase, Databricks CEO Ali Ghodsi said the company is looking to sharpen its edge in an “era of AI-native, agent-driven applications.” Per Ghodsi, a good part of Neon’s appeal was that 80% of the databases provisioned on its platform were created automatically by AI agents rather than by humans.

Databricks is willing to pay handsomely for that use case. Per Crunchbase data, the Neon purchase appears to be the second-most-expensive 1 to date for Databricks, after its $1.3 billion purchase of generative AI startup MosaicML two years ago.

As a startup, Neon also attracted attention and good-sized checks from venture and strategic investors. Founded in 2021, the Silicon Valley company raised about $130 million in known venture funding to date, with lead investors including Microsoft’s M12 and Menlo Ventures.

For Databricks, the Neon acquisition comes amid a period of sharp growth. Per a CNBC report posted on the company’s website, annualized revenue is expected to reach $2.4 billion by the midpoint of this year. The company also projects that annualized sales for the first half of this year will be up 60% from a year earlier.

Databricks’ purchase of Neon isn’t a done deal yet, as it will require regulatory approval.

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Illustration: Dom Guzman