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Neon, a startup developing a serverless open-source alternative to AWS Aurora Postgres, has announced a funding round of around $46 million, with $30 million coming from Menlo VC. This brings Neon’s total funding to $104 million. The new investment will be used to enhance Neon’s developer experience, sponsor R&D in the AI space, and expand its workforce from 50 to nearly 100 by year’s end.
Neon’s Mission and Focus on Free Tier
Founded by Nikita Shamgunov, who previously founded MemSQL (now SingleStore), Neon emerged from stealth last May. Despite not being profitable yet, the company is focusing on growing its free tier, which has hundreds of users. Shamgunov emphasizes the importance of making Postgres in the cloud affordable and accessible for small teams and individual developers. Neon plans to shift its efforts to monetization by the end of the year.
The Popularity of Postgres and Neon’s Unique Approach
Postgres, the relational database management system, has grown massively in popularity, with over 45% of developers using it, according to a 2023 Stack Overflow survey. Neon aims to provide an open-source alternative to Aurora, emphasizing serverless Postgres.
What sets Neon apart is its architecture, which separates storage and compute to deliver a serverless multi-cloud Postgres database. It supports features like branching for isolated database instances for testing and development, and point-in-time recovery to restore a database to a specific time in history.
Neon also offers cost savings by charging customers only for the resources they use, pushing infrequently accessed data to the cheapest storage medium, and automatically scaling down to zero on inactivity.
Competition and Growth Plans
While there’s plenty of competition in the market for relational database platforms, Neon has shown strong growth, with 130,000 databases created using the platform to date. Shamgunov plans to scale gradually, doubling down on engineering and developer relations in the next five to six months, and maintaining a frugal approach with multiple years of runway.
Conclusion
Neon’s funding round and innovative approach to providing a serverless open-source alternative to AWS Aurora Postgres highlight the growing demand for flexible and cost-effective database solutions. With its unique architecture and focus on developer experience, Neon is well-positioned to make a significant impact in the industry, offering a valuable solution for developers and organizations alike.
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