Neon Acquisition, Valuation, Funding & Investors
Neon was acquired by Databricks for $1B in May 2025.
Cumulative funding Neon raised
$130M
across 6 funding rounds
Key investors in Neon
Notable Capital
General Catalyst
Menlo Ventures
Khosla Ventures
Founders Fund
GGV Capital
M12
Abstract
About Neon
Neon is a San Francisco-headquartered database company offering serverless PostgreSQL with independent scaling of storage and compute. Launched in 2021, it features branching for instant database copies used in development workflows and autoscaling for production loads. Developers access it via AWS, GCP, or Azure regions globally. Neon's architecture supports millions of queries per second and integrates with ORMs like Prisma and frameworks such as Next.js for AI and web applications.
Founded
2021
HQ
San Francisco, CAWebsite
Status
Acquired
Customer focus
B2B
Revenue model
Subscription
Valuation
$1B (acquired May 2025)
Neon Acquisition
Neon was acquired by Databricks for $1B on 14 May 2025.
Before the acquisition Neon had raised $130M across 6 funding rounds.
Databricks, the San Francisco-based Data and AI company projecting $2.4 billion in annualized revenue by mid-2025 after raising $10 billion in venture funding at a $62 billion valuation and $5.3 billion in debt, agreed to acquire Neon, a Silicon Valley serverless Postgres database platform founded in 2021 by database engineers and Postgres contributors. Neon, serving over 18,000 customers and having raised $130 million from investors including Microsoft’s M12 and Menlo Ventures, pioneered a cloud-native architecture separating storage and compute for elastic scaling, branching, and forking, optimized for developers building reliable applications from personal projects to enterprises. Over 80% of databases on Neon’s platform are provisioned automatically by AI agents, reflecting the shift to AI-native applications. The $1 billion deal, announced May 14, 2025, aims to integrate Neon’s serverless Postgres with Databricks’ Data Intelligence Platform to eliminate data silos, simplify architecture, prevent performance bottlenecks from thousands of concurrent AI agents, reduce costs, and accelerate innovation in agent-driven systems. Databricks CEO Ali Ghodsi highlighted Neon’s appeal for the era of AI-native apps, while Neon CEO Nikita Shamgunov emphasized building the world’s best Postgres experience as a core piece of the modern AI stack. Neon’s team will join Databricks post-close to maintain expertise for its community and advance the open-source mission. The acquisition, Databricks’ second-largest after $1.3 billion for MosaicML, requires regulatory approval and is expected to close later in 2025 amid intensifying competition, including Snowflake’s $250 million purchase of Crunchy Data, signaling consolidation in PostgreSQL infrastructure for AI supremacy. It follows Databricks’ 13 prior deals and underscores Postgres as a primitive for AI applications in a $100 billion-plus database market disrupted by AI.
| Acquirer | Date | Type | Price |
|---|---|---|---|
| 14 May 2025 | Strategic M&A | $1B |
Neon Funding History
Neon has raised a total of $130M across 6 funding rounds.
Neon's first fundraising round was a $5M seed round in March 2021. The most recent completed round was a $26M undisclosed-stage round in August 2024.
Neon funding rounds
| Date | Stage | Investors | Raised | Deal Summary |
|---|---|---|---|---|
| Aug 2024 | Undisclosed stage | M12 (lead); General Catalyst; Menlo Ventures; Abstract; Notable Capital | $26M | Neon is a serverless PostgreSQL platform optimized for AI agents, enabling scalable database branching for development, testing, and production environments. The company transitioned to a fully usage-based pricing model in August 2024 with a $5 monthly minimum spend, charging for Compute Units based on actual resource consumption. This aligns costs with usage patterns, driving revenue through high-volume, AI-provisioned workloads where over 80% of databases are now created automatically by AI agents rather than humans. In August 2024, Neon raised $25.6 million in a strategic investment round led by M12 (Microsoft's venture fund), with participation from Abstract, General Catalyst, Menlo Ventures, and Notable Capital. This brought total funding to $130.6 million across multiple rounds, including a prior $30 million Series A-1 in July 2022 led by General Catalyst. The round supported continued growth amid explosive scaling from 20,000 databases in early 2023 to over 700,000 by April 2024. Sacra estimates Neon reached $25 million in annual recurring revenue (ARR) by May 2025. The platform served more than 18,000 customers by mid-2025, with over 5,200 business customers using AI capabilities weekly. Revenue scales via consumption-based expansion as users create more branches and run larger workloads. In May 2025, Databricks acquired Neon for approximately $1 billion, reflecting a premium for its serverless Postgres technology amid the AI database battle. Neon's separated storage and compute architecture optimized costs using object storage for data retention and on-demand compute. |
| Aug 2023 | Series B | Menlo Ventures (lead); General Catalyst; Snowflake Ventures; Khosla Ventures; Databricks Ventures; Founders Fund; GGV Capital; Elad Gil; Notable Capital | $46M | - |
| Mar 2023 | Angel | - | $4M | - |
| Jul 2022 | Series A | Notable Capital (lead) | $30M | Neon is a serverless Postgres database platform founded in 2021 and headquartered in San Francisco, offering developers a managed, scalable cloud service for Postgres with features like multicloud storage, branching, and quickstart integrations. In July 2022, Neon raised $30 million in a Series A-1 round led by General Catalyst, with participation from GGV Capital, Khosla Ventures, Founders Fund, and angel investors including Elad Gil; Notable Capital is confirmed as an investor in Neon's funding history. The round was described as oversubscribed, bringing total funding to $55 million at the time, with proceeds allocated to expanding the engineering team, building go-to-market efforts, developer relations, and new partnerships. At the time of the round, Neon was pre-revenue with its service in beta since June 2022, reporting 700 registered users and over 5,000 on the waitlist, planning to enhance the free tier before monetizing in 2023 while maintaining 28-30 months of runway with a frugal burn rate and around 30 employees. A later Series B raised $104 million at an $800 million valuation led by Menlo Ventures with participation from Notable Capital, GGV Capital, and Khosla Ventures. Neon continued raising capital, including a $25.6 million strategic round in August 2024 led by M12 and totaling $130.6 million across rounds before being acquired by Databricks for approximately $1 billion in May 2025. Later estimates indicate $25 million ARR by May 2025 amid growth to over 700,000 databases by April 2024, driven by AI agent usage. |
| Jul 2021 | Series A | - | $19M | Neon is a San Francisco-based company founded in 2021 by Postgres experts Heikki Linnakangas and Stas Kelvich, incubated at Khosla Ventures with Nikita Shamgunov as CEO. It provides the first open-source, fully-managed, multi-cloud Postgres as a service, featuring serverless architecture that separates storage and compute for bottomless storage, autoscaling, and cost savings. The platform targets modern applications and developers, gaining traction with over 3,600 GitHub stars after its technical preview. The first disclosed is a Series A prior to July 2022, followed by a $30 million Series A-1 on July 26, 2022, led by GGV Capital with Khosla Ventures, General Catalyst, Founders Fund, Elad Gil, and angels like Nat Friedman. This brought total funding to $54.3 million. Funds supported engineering expansion, product growth, GTM team, and developer relations. Subsequent rounds included $46 million Series B in early 2023 led by Menlo Ventures (total funding to $104 million), $25.6 million strategic in August 2024 led by M12, reaching $130.6 million total. Neon competed in serverless Postgres space against AWS Aurora Postgres, emphasizing developer experience and AI integration potential, culminating in acquisition by Databricks to enhance data intelligence services. |
| Mar 2021 | Seed | - | $5M | Neon is a San Francisco-based serverless Postgres database company founded in 2021. It provides a developer-friendly, multi-cloud, fully-managed Postgres service with features like bottomless storage and autoscaling. |
Who has invested in Neon?
11 investors have backed Neon across its funding rounds, including Notable Capital, General Catalyst, Menlo Ventures, Khosla Ventures, Founders Fund and GGV Capital.
Lead investors include M12, Menlo Ventures and Notable Capital.
Neon Investors
| Investor | HQ | Rounds | Role | First check |
|---|---|---|---|---|
| San Francisco, CA | 3 | Lead | Jul 2022 | |
| San Francisco, CA | 2 | Participant | Aug 2023 | |
| San Francisco, CA | 2 | Lead | Aug 2023 | |
| Bozeman, MT | 1 | Participant | Aug 2023 | |
| San Francisco, CA | 1 | Participant | Aug 2023 | |
| San Francisco, CA | 1 | Participant | Aug 2023 | |
| United States | 1 | Lead | Aug 2024 | |
| San Francisco, CA | 1 | Participant | Aug 2023 | |
| San Francisco, CA | 1 | Participant | Aug 2023 | |
This data is available for Pro users. Sign up to see all 11 Neon investors. Start Free Trial | ||||
Benchmark 350K+ Funding Rounds and Disclosed VC Valuation Multiples
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Start Free TrialNeon Competitors
Neon competitors include listed companies like Oracle Corp Japan and Rackspace, and private ones like MinIO, Imply, XSKY Data Technology and Dt Dream.
| Company | HQ | Status | Revenue | EBITDA | Valuation | Revenue Multiple |
|---|---|---|---|---|---|---|
| San Francisco, CA | Private | - | - | $1B | - | |
| San Francisco, CA | Private | - | - | $1.1B | - | |
 Beijing | Private | - | - | $675M | - | |
| Hangzhou | Private | - | - | $1.5B | - | |
 Japan | Publicly listed | $1.8B | $589M | $7.7B | 3.9x | |
| United States | Publicly listed | $2.7B | $244M | $997M | 1.6x |
Neon Public Comps
Neon is no longer listed, but its public comps include Rackspace, cyber_Folks, Systena, SAKURA Internet, Net263, Montnets, Wiit, Backblaze, e-Hualu and Odine.
| Last FY | EV/Revenue | EV/EBITDA | ||||||
|---|---|---|---|---|---|---|---|---|
| Revenue | EBITDA | Last FY | LTM | 2027E | Last FY | LTM | 2027E | |
| $2.7B | $244M | 1.5x | 1.6x | 17.1x | 15.0x | |||
| $226M | $72M | 5.1x | 4.3x | 16.1x | 13.0x | |||
| $607M | $107M | 1.4x | 1.4x | 7.9x | - | |||
| $227M | $54M | 4.8x | 4.1x | 19.9x | 14.1x | |||
| $119M | ($29M) | 7.4x | - | (30.1x) | - | |||
| $389M | ($17M) | 2.5x | - | (55.5x) | - | |||
| $193M | $51M | 6.0x | 6.0x | 22.7x | 14.3x | |||
| $146M | $4M | 6.1x | 5.4x | 225.6x | 20.4x | |||
This data is available for Pro users. Sign up to see all Neon competitors and their valuation data. Start Free Trial | ||||||||
Common questions about Neon
| When was Neon founded? | Neon was founded in 2021. |
| Where is Neon headquartered? | Neon is headquartered in San Francisco, CA, United States. |
| Is Neon publicly listed? | No, Neon was acquired by Databricks in May 2025. |
| Who acquired Neon? | Neon was acquired by Databricks in May 2025. |
| How much was Neon acquired for? | Neon was acquired for $1B in May 2025. |
| How much funding has Neon raised? | Neon has raised $130M across 6 funding rounds. |
| What was Neon's last funding round? | Neon's last funding round was a $26M undisclosed-stage round in August 2024, led by M12. |
| Who are Neon's investors? | Neon's investors include Notable Capital, General Catalyst, Menlo Ventures, Snowflake Ventures, Khosla Ventures, Databricks Ventures, M12, Founders Fund, GGV Capital, Abstract and 1 other. |
| Which companies are comparable to Neon? | Companies comparable to Neon include MinIO, Imply, XSKY Data Technology, Dt Dream, Oracle Corp Japan and Rackspace. |
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