Graph database provider Neo Technology raises $20M

Neo Technology doubled its revenue and size of its user community in 2014

Companies have been collecting data on us for, literally, decades. There's so much data out there, but companies need a fast way to make sense of it. 

To help make sense of it, Neo Technology, a provider of graph databases to enterprise companies and the creator of the Neo4j graph database, has raised a new $20 million round of funding, the company announced on Thursday.

The Series C round was led by Creandum with Dawn Capital, with previous investors Fidelity Growth Partners Europe, Sunstone Capital and Conor Venture Partners all participating in the round. Neo Technology had previously raised $25 million, most recently an $11 million round in November of 2012. This latest round brings the company's total funding to $45 million.

As per the investment, it was also announced that Johan Brenner of Creandum will be joining the Board of Directors at Neo Technology.

The company will use the new money to build out its Neo4j product, drive open source community growth, and expand its U.S. and international footprint in response to increasing demand for graph databases. 

"It has taken a long time to build out the product. We got started working on the tech back in 2000 in Sweden, so we've been at this for 15 years now," Emil Eifrém, CEO of Neo Technology, said in an interview.

"It's really only in past 12 to 18 months that we feel that the momentum in big enterprises has taken off. We had seen some of that earlier, but now we are seeing Fortune 500 companies write checks work hundreds of thousands for their software."

This shift has been a big shift for the company, and that traction is a big reason that it decided that now was the right time to raise money, over two years after its last funding round.

San Mateo-based Neo Technology is a provider of graph databases for enterprise clients. A graph database will search records that are directly connected to other records, finding the short route between different sets of data, as opposed to relational graphs, which has to search all of the data in order to find anything that meets the search criteria. For larger sets of data, this can take a very long time, hence the move toward graph databases.

To put in simple terms: a relational database is like going through every page of a book until you find what you were looking for, while a graph database is like looking in the index and then going directly to what you need.

So why the sudden shift in just the last year and a half?

"Most other data technologies, other than graph databases, focus on isolated data entities, but are really bad at finding the relationships between data objects. They are good at storing, but they cannot find the things that surround and give me color," said Eifrém. "Companies want to make sense and understand the data, and we are now at the tipping point. They were managing and storing data, now they want to start making sense of it in real time."

One client is Walmart, which uses Neo4j to give customers recommendations. They had been storin purchases made by customers, both online and in store, but are now using graph databases to make recommendations as to other products that their customers might want to buy.

Another customer is blog site Medium, which use Neo Technology to store posts that people write, and then use the social graph so it can recommend other people on the network, as well as other piece of content.

In another use case Cisco used it for their support portal, which had a backlog of support cases from the last 20 years to sift through. 

"It had been around since the 90s, and stored a huge list of issues and support problems. They wound up just getting repetitive reports," Eifrém explained. "There was a problem with some file but there was almost always an already existing solution no one ever found."

Now, by using graph databases, the site can find previous cases that it can link people to, including forums, conversations, and support cases, to better solve their problems.

Neo Technology was originally founded in Sweden in 2000, and only set up U.S. operations in 2011. Since then it has either doubled or tripled its revenue every year. The company doubled the sized of its user community in 2014 to around 40,000 users.

And the future looks bright for graph databases: they are expected to reach a quarter of all enterprises by the year 2017, according to Gartner.

"There was nicheification of graph databases, but that is rapidly going away. The thought was it was exclusively useful for social. Now, it's a big difference to have all these mainstream use cases," Eifrém said.

"Every retail company on the planet can use them; all verticals can use graph based search. Anyone who is searching for data will use them; even big banks are using them for ID and access management. This is the mainstreamification of graph databases."