Neon, an open-source database startup, has raised $104 million in funding, backed by leading investors including Menlo Ventures and Khosla Ventures. It offers a serverless Postgres platform that allows developers to build reliable and scalable applications faster. Neon separates compute and storage, similar to AWS Aurora, to offer developer features like autoscaling, branching, point-in-time restore, and more.
Today, Neon announced a $25 million strategic investment led by M12, Microsoft"s Venture Fund. Neon will use this funding for research and development. Currently available on AWS, Neon will expand to Microsoft Azure with this investment.
Andrew Smyth, Managing Partner at M12, said:
"Postgres is rapidly becoming the database of choice for developers, and we are investing heavily in that ecosystem. Neon is a leading Postgres platform, and this strategic investment emphasizes our commitment to deeply integrate Neon into Azure."
Microsoft is already shaping the modern development stack with tools like GitHub, VS Code, TypeScript, OpenAI, and Copilot. Neon aims to deliver a better developer experience aligned with Microsoft"s strategy, targeting to power next-generation AI apps by offering the best Postgres platform for developers.
Vector databases are critical components of the AI stack, and many developers are using them for AI applications. Neon"s pgvector is a vector store built in Postgres with unique serverless capabilities that easily scale for index builds and then back down for normal traffic or RAG queries.
Neon co-founder and CEO Nikita Shamgunov told TechCrunch regarding the investment:
"We"re not looking to raise — this is not a new round. We are well-capitalized with more than $100 million in funding. But this is Microsoft. We couldn"t pass up the opportunity to strengthen Neon"s relationship with Microsoft and Azure; their role in the future of developer tools is only growing."
You can join the waitlist to get notified about Neon"s availability on Azure.