Big tech companies are showing interest in investing in database technology, as demonstrated by Neon, a startup creating an open-source alternative to AWS Aurora Postgres, announcing a $25 million strategic investment led by Microsoft’s venture arm M12.
Neon plans to use the capital for research and development, expanding into Microsoft Azure, and enhancing its database capabilities to serve existing and new customers.
According to Neon co-founder and CEO Nikita Shamgunov, the investment by Microsoft strengthens their relationship with Azure, a vital player in the future of developer tools.
M12 manager partner Andrew Smyth emphasized the growing popularity of Postgres among developers and Microsoft’s commitment to integrating Neon into Azure.
Neon was founded in 2021 by Nikita Shamgunov, Heikki Linnakangas, and Stas Kelvich, with Shamgunov previously being the CTO and CEO of MemSQL, now known as SingleStore.
Recognizing the widespread use of Postgres, Shamgunov saw an opportunity to provide an alternative to Aurora and break AWS’s monopoly in the database technology space.
Neon’s managed cloud-based database platform offers both free and paid plans with usage-based pricing, enabling developers to streamline database management and scale resources seamlessly.
The platform’s ability to clone databases, preview changes, and automatically adjust resources based on usage has attracted scale-ups and enterprises looking to enhance development velocity without operational overhead.
Neon has seen significant adoption, particularly in the AI space, with thousands of startups and SMBs leveraging its premium services to power their applications.
With $130.6 million in funding, Neon is well-positioned for growth, with plans to expand its workforce and focus on engineering to further enhance its database platform.
Abstract Ventures, General Catalyst, Menlo Ventures, and Notable Capital also participated in the recent strategic investment round.
