Databricks is buying database startup Neon for about $1 billion

Data analytics startup Databricks said Wednesday that it is buying Neon, a cloud-based database software vendor, for about $1 billion.

It is the latest big deal for Databricks, which bought artificial intelligence model training startup MosaicML for $1.3 billion in 2023 and paid more than $1 billion last year for data optimization startup Tabular.

Neon has more than 18,000 customers, Databricks said in a statement. Clients include OpenAI, Adobe, Boston Consulting Group, Replit and Vercel, according to Neon’s website.

Many developers have flocked to Neon, which is open source and billed as an alternative to top cloud provider Amazon Web Services’ Aurora Postgres database service. The open-source PostgreSQL database originated in the 1980s. Supabase, a startup whose tools have become popular with “vibe-coding” tools such as Lovable and Figma’s recently announced Figma Make, is also based on PostgreSQL.

Cloud providers Google and Microsoft have their own options for running PostgreSQL databases. Databricks sells software that can help with cleaning up data, executing queries and running AI models.

Microsoft, Snowflake and Databricks have all invested in Neon, whose co-founder and CEO is former Meta and Microsoft engineer Nikita Shamgunov. After leaving Meta, Shamgunov ran database startup SingleStore, formerly known as MemSQL.

“What he’s done is amazing,” Ali Ghodsi, Databricks’ co-founder and CEO, said of Shamgunov. Unlike Supabase, Neon separates the computing work from the underlying data storage, making its software more economical, Ghodsi said.

Supabase did not immediately respond to CNBC’s request for comment.

Databricks has not made a decision about what Shamgunov’s title will be after the Neon acquisition closes, Ghodsi said.

Neon charges based on the amount of computing and storage each customer uses per month. Its software can run in Amazon and Microsoft’s clouds.

Founded in 2021, Neon is a distributed company, with more than 130 employees, according to a job description.

Databricks, based in San Francisco, was founded in 2013 and was valued at $62 billion in a $10 billion financing announced in December. Some of the money was earmarked for acquisitions.

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