Databricks Inc. is reportedly seeking to buy Neon Inc., a startup that sells a commercial version of the open-source PostgreSQL database.

Tech publication Upstarts Media today cited sources as saying that the acquisition talks are at an advanced stage. Some insiders reportedly describe the deal “as if it’s done,” while others cautioned that it may still fall through. It’s believed the transaction could be worth more than $1 billion.

San Francisco-based Neon has raised more than $130 million in funding from Microsoft Corp’s M12 fund and other backers. Its PostgreSQL distribution’s flagship feature is a serverless architecture that removes the need for customers to manage the underlying infrastructure.

Neon automatically adds or removes hardware resources to database environments as workload requirements change. According to the company, the software can provision storage capacity separately from processing power and vice versa. In some legacy database environments, customers can only add both at once, which makes it more difficult to avoid unnecessary hardware spending.

Before an application can retrieve information from a database, it has to establish a network connection to that database. The task consumes hardware resources that can slow down database performance. According to Neon, its PostgreSQL implementation mitigates the issue with a so-called connection pooling feature. The technology maintains a collection of standby connections that can be quickly assigned to applications when the need arises, which avoids the need to expend hardware resources on creating a new connection.

PostgreSQL is a relational database, which means it stores information in rows and columns. Neon provides a cybersecurity tool that allows companies to regulate which users can access what data down to individual rows. If user error or a ransomware attack deletes a database’s contents, administrators can roll it back to an earlier version.

Databricks’ reported interest in Neon may relate to the fact that the database lends itself to artificial intelligence use cases. Neon can store vectors, the mathematical structure in which AI models hold information. It’s also capable of provisioning new database instances in one second, which Neon says is useful for AI coding assistants. The faster a coding assistant can launch a database when a developer asks it to, the better its prompt response times will be.

Databricks has made multiple startup acquisitions over the past two years to bolster its AI capabilities.

Last month, the software maker acquired Fennel AI Inc. for an undisclosed sum. The startup developed a platform for creating data pipelines, the automated software workflows that supply AI applications with the data they process. Databricks earlier bought AI dataset management specialist Lilac AI Inc. and MosaicML Inc., a large language model developer. The latter deal was reportedly worth $1.3 billion. 

Image: Neon