We are excited to announce that M12 has led a $25.6 million strategic investment in Neon, a serverless Postgres database designed for modern developers, alongside existing investors Abstract Ventures, General Catalyst, Menlo Ventures, and Notable Capital.

Postgres has quietly become ubiquitous as the go-to relational database. Developers choose Postgres due to its open ecosystem, reliability, and superior performance. Just as developer tools and workflows evolved with platforms like GitHub and Vercel, we believe databases will follow a similar path. Neon’s ability to provision new databases in under a second, thanks to its custom-built storage engine, will be a game-changer for development speed and efficiency for Azure developers.  

Neon is built for the cloud. Its architecture is based on the separation of compute and storage. A Neon compute runs Postgres, and storage is built from the ground up and open sourced under Apache 2.0 license. This allows Neon to offer developers efficient scaling, eliminating the need for pre-provisioning, significantly reducing operational costs and ensuring optimal performance during traffic spikes. These capabilities make Neon especially attractive for AI applications.  

Via the Postgres extension pgvector, Neon becomes a vector store built in Postgres with serverless capabilities. It can efficiently scale up for intensive tasks like index builds and scale back down for regular traffic or retrieval-augmented generation (RAG) queries. Neon maintains developer familiarity with Postgres while providing uniquely high performance and low costs for AI workloads. 

We chose to invest in Neon to further expand the Postgres ecosystem in Azure and bring the database into the modern developer workflow, making it more automated, easier to manage, and AI-ready. We are thrilled to partner with co-founders Nikita, Heikki, Stas and the entire Neon team.