EXCLUSIVE-Databricks to buy Sequoia-backed Tecton in AI agent push

By Krystal Hu

Aug 22 (Reuters) - Databricks will acquire machine learning startup Tecton to expand its AI agent offerings, the latest in a string of deals aimed at offering full-scale AI building tools for enterprise customers, its chief executive told Reuters on Friday.

Tecton, backed by Sequoia Capital and Kleiner Perkins, provides software that helps companies analyze and deploy data at scale with low latency.

Financial terms of the deal, which consists of Databricks' private shares, were not disclosed. Tecton was last valued at $900 million in a 2022 private funding round and has about 90 employees.

The deal comes on the heels of Databricks' announcement this week that it had signed a term sheet for a new funding round at a valuation of more than $100 billion, up more than 60% from eight months ago.

Tecton has raised $160 million from investors including Andreessen Horowitz and Bain Capital Ventures since it was founded in 2020 by former Uber engineers who created Michelangelo, an AI platform that Uber uses internally for real-time pricing and other functions.

Databricks CEO Ali Ghodsi said Tecton's technology and talent could help to build out Databricks' Agent Bricks, its flagship product for building and automating workflows with AI agents, as competition intensifies to supply AI tools to businesses. Specifically, the acquisition could help to cut response times in AI applications, a top priority for customers building interactive services.

"It's really the real-time building block to feed real-time information into the agents," he said, adding that speed is crucial for AI use cases such as voice interaction. "Many of the use cases are directly user-facing and human-facing, and humans hate to wait."

The two companies already had close ties. Tecton partnered with Databricks, as well as its competitor Snowflake, in 2022. The two data platforms have also become investors in the startup.

Ghodsi said many of Tecton's customers - including crypto exchange Coinbase - already use Databricks' services. He added that the acquisition would help to deepen relationships with clients that rely on both technologies.

The deal continues Databricks' acquisition spree, fueled by a soaring private valuation that it has used to buy venture-backed startups while it builds out a comprehensive AI platform. Databricks acquired generative AI platform MosaicML for $1.3 billion in 2023, added Tabular in 2024 to bring the creators of the Apache Iceberg data format in-house, and earlier this year purchased serverless database company Neon for $1 billion to power high-speed AI applications.