Snowflake acquires database startup Crunchy Data for $250M to rival Databricks in AI push

Snowflake has acquired Crunchy Data, a cloud database startup specializing in PostgreSQL, in a deal valued at approximately $250 million, the data analytics software maker confirmed in a statement on Monday.

The acquisition underscores Snowflake’s push to expand its database capabilities and deepen its data stack as it looks to keep pace with rivals like Databricks, which recently acquired Neon in a similar strategic move.

The acquisition comes just four months after reports surfaced that Snowflake was in discussions to acquire data analytics startup Redpanda, part of its broader push to expand its AI-focused product lineup.

Crunchy Data isn’t just another PostgreSQL shop. The startup also provides a cloud-hosted version of the popular open-source database, beefed up with security and performance improvements. PostgreSQL overtook MySQL as the most-used database among developers in Stack Overflow’s 2023 survey, and it’s not hard to see why Snowflake wants in.

While Databricks is reportedly spending about $1 billion on Neon, Snowflake’s deal is considerably smaller. But Crunchy Data’s numbers aren’t insignificant. One person familiar with the company told CNBC that it’s pulling in over $30 million in annualized revenue. Another person said Snowflake had looked into acquiring Neon last year but ended up passing, CNBC reported.

With this deal, Snowflake plans to roll out early access to a PostgreSQL database service. The goal? Make it easier for customers to bring their data into the Snowflake platform and run more complex queries. “We’re helping our customers build a strong foundation to lead in the era of agentic AI,” CEO Sridhar Ramaswamy said during a recent earnings call.

Snowflake’s been having a good year so far. Its stock is up 36%, and analysts at Stifel have been bullish, comparing the company to pro golfer Scottie Scheffler after it posted a 25% year-over-year revenue boost in May. Stifel has a buy rating on the stock.

Founded in 2012, Crunchy Data is headquartered in Charleston, South Carolina, and employs about 100 people. Its backers include Alsop Louie Partners, Gray Ventures, Harbert Growth Partners, and Heavybit. Notable customers include UPS, Thales, Kyndryl, and the U.S. Department of Homeland Security.

With both Snowflake and Databricks making big PostgreSQL bets, it’s clear they’re racing to become the go-to platforms for companies building AI tools that run on massive, flexible datasets. This deal gives Snowflake another piece of that puzzle.