Neon Inc., a startup with a serverless distribution of the open-source Postgres database, today announced that it has raised $25 million in funding.

Microsoft Corp.’s M12 venture capital arm led the investment. It was joined by existing Neon investors Abstract Ventures, General Catalyst, Menlo Ventures and Notable Capital. The capital infusion brings the company’s total outside funding to more than $130 million.

Neon sells a commercial version of Postgres, an open-source relational database that is widely used in the enterprise. One of the reasons behind Postgres’ popularity is its support for ACID, a technology standard that prevents errors from finding their way into users’ data. The platform is also extensible, which allows companies with advanced requirements to customize it for their use cases.

Neon’s commercial Postgres distribution includes several additional features that make the database easier to manage. To implement those features, the company modified several of the original open-source version’s components. That includes Postgres’ storage engine, the part of the database tasked with managing how it reads, writes and deletes data.

The company’s distribution features a serverless architecture, meaning administrators don’t have to manually manage the infrastructure on which it runs. The platform includes an autoscaling engine that can automatically add or remove hardware resources as workload requirements change. That avoids the need for overprovisioning, or the practice of buying more hardware than necessary to accommodate potential traffic spikes.

Neon’s version of Postgres decouples storage and compute allocation. As a result, developers can increase the amount of storage capacity available to the database without also adding compute resources and vice versa. The ability to only provision the hardware resources that a database requires for a given task reduces unnecessary infrastructure expenses.

“The database only runs when needed, but is always available – and with the precise capacity required by the workload,” Neon Chief Executive Officer Nikita Shamgunov wrote in a blog post. 

Neon also ships with its Postgres distribution with a feature dubbed branching. The capability allows developers to quickly create new copies of the information in a database environment. A software team could, for example, copy the contents of a sales database and use it to test a new demand forecasting application.

The startup says its branching tool also lends itself to disaster recovery tasks. If an error finds its way into a database, administrators can use the tool to find an earlier version of the information inside and recover it in the form of a fresh copy.

Companies can use Neon’s database to store, among other things, vectors. Those are the mathematical structures that artificial intelligence models use to hold the information they process. Neon says the capability removes the need for customers to use a specialized vector store alongside their main database and thereby lowers overhead. 

The company’s platform has been adopted by several thousand paying customers since its launch in 2021. Additionally, Neon offers a free tier that is used by hundreds of thousands of developers.

According to TechCrunch, the funding round announced today will enable the company to hire 20 new workers by year’s end. The recruiting push will place an emphasis on growing Neon’s engineering teams. The company will also use a portion of the funding to make its database available on Microsoft’s Azure cloud platform. 

Image: Neon