Snowflake Undercuts Databricks with Crunchy Data Acquisition

“With the closing of this acquisition, we’ll be introducing Snowflake Postgres: an enterprise-grade, AI-ready Postgres database, fully integrated into the Snowflake AI Data Cloud.” – Sridhar Ramaswamy, CEO of Snowflake.

At its annual Summit, Snowflake announced its intent to acquire Crunchy Data for an estimated $250 million. This acquisition is seemingly a strategic response to Databricks’ $1 billion purchase of Neon just weeks prior. Both deals center on PostgreSQL, the open-source database that now dominates the developer landscape, and give us an inkling of what they are aiming for: to own the infrastructure layer for the next generation of AI agents.

Crunchy Data, a Charleston-based startup with about 100 employees and over $30 million in annualized revenue, has quietly become a trusted provider of enterprise-grade PostgreSQL services. Its managed Postgres offering, Crunchy Bridge, is noted for security, scalability, and compliance. By acquiring Crunchy Data, Snowflake aims to fold these capabilities into its platform through “Snowflake Postgres,” an enterprise-ready, AI-optimized PostgreSQL service. According to a statement by the company, Snowflake Postgres “significantly simplifies how developers build, deploy and scale production-ready AI agents and apps.”

Crunchy Data solves a persistent problem for Snowflake: how to handle operational, transactional data, specifically, the kind of data needed to support AI agents operating at scale. While Snowflake has excelled at warehousing structured data, PostgreSQL brings transactional support and a rich, open-source ecosystem that’s favored by developers.

Snowflake executives were candid about this need. “With that in mind, it was important to acquire a company that was not just engineered for quick experimentation,” said Vivek Raghunathan, SVP of Engineering at Snowflake. “The vision here is that Snowflake Postgres will simplify how developers build, deploy and scale agents and apps.”

Crunchy Data’s strength lies in enterprise readiness. As its co-founder Paul Laurence stated, “Our deep-rooted commitment to stringent security and comprehensive compliance has made us the trusted Postgres partner for organizations across regulated industries, including federal agencies, Fortune 500 financial institutions and high-scale SaaS companies.”

Databricks Fired First with Neon

Snowflake’s acquisition closely follows Databricks’ purchase of Neon, a PostgreSQL startup known for serverless architecture and ultra-fast provisioning. More than 80% of Neon’s databases were reportedly created by AI agents (not humans). A strong indicator of where the market is headed.

Databricks’ $1 billion outlay for Neon reveals its intention to dominate this agentic AI space. Already bolstered by other major acquisitions like MosaicML ($1.3B) and Tabular (~$1B), Databricks is positioning itself as the developer-first, AI-native platform.

In contrast, Snowflake has taken an enterprise-first approach. This competition is shaping up to mirror the classic iOS vs Android debate, as one social media analyst put it: “One promises faster performance with lower TCO and the other commits to open-source and vendor-neutrality.”

Databricks favors flexibility, unstructured data, and innovation speed. Snowflake is optimizing for governance, compliance, and integration with mission-critical systems. Snowflake CEO Sridhar Ramaswamy made it clear on a recent call: “We’re helping our customers build a strong foundation to lead in the era of agentic AI.”

Blue Yonder’s SVP of Generative AI, Chris Burchett, summed up the practical impact: “Bringing PostgreSQL technology into the Snowflake ecosystem is an opportunity for our development teams to accelerate and simplify benefits for our customers.”

With more than 5,200 Snowflake customers already using its AI features weekly and Q1 revenue surpassing $1 billion, Snowflake is not trailing as far behind as critics claim. Still, the optics matter: Databricks is reportedly growing at >50% annually, compared to Snowflake’s ~20%.

While the acquisition is subject to regulatory approval, the tech industry is already buzzing with opinions.

Some see this as a strong counterpunch from Snowflake. One analyst on LinkedIn wrote, “Snowflake waited on the curveball and hit an opposite field home run.” 

But, there’s also the valuation gap to consider. At $250 million, Crunchy Data was a bargain compared to Neon’s $1 billion price tag. But that discount reflects different use cases: Neon is optimized for dynamic, AI-first architectures; Crunchy is optimized for regulated, enterprise environments.

Investors appear supportive so far. Snowflake shares are up roughly 36% this year, with analysts like Stifel maintaining a “buy” rating.

The acquisition of Crunchy Data positions Snowflake not as a flashy disruptor, but as an enterprise that values secure, compliant, and scalable infrastructure that can power the world’s most sensitive and important workloads. Whether that’s enough to outpace Databricks’ speed and developer appeal remains to be seen.