Microsoft made one of the most significant investments of the year in Neon

Microsoft is putting $25 million into Neon, an open-source database startup. This investment comes as part of the bigger funding round for Neon, bringing the total raised funds to $104 million from top investors like Menlo Ventures and Khosla Ventures.

What sets Neon apart? Their serverless Postgres platform allows developers to create steadfast applications that can be stretched without difficulty. Like AWS Aurora, Neon splits computing from storage. It offers many features that developers adore: automatic scaling, branching, restoring a point in time, etc.

With Microsoft’s investment, Neon has a solid plan to broaden its services to Microsoft Azure. This is significant because it indicates that Neon isn’t only centered on AWS but is diversifying, too—this will make its platform reachable to more kinds of developers.

Andrew Smyth, who works as Managing Partner at M12 (that’s Microsoft’s Venture Fund), highlighted how Postgres is quickly becoming the leading choice for databases among developers and that supporting this ecosystem aligns with Microsoft’s strategies completely. Neons are at the forefront, and Microsoft wants to ensure Azure is integrated with it.

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 not a newcomer to the development game. They have been shaping the modern development stack with tools like GitHub, VS Code, TypeScript, OpenAI, and Copilot. Neon’s goal to provide a better developer experience matches Microsoft’s strategy well—especially when powering next-generation AI apps. Neons have png vector, a vector store built in Postgres that is very good for vector databases. This has special serverless abilities, offering scalable answers for index builds and queries.

However, considering OpenAI’s recent partnership with Apple and the latter’s investment in the former, Microsoft might feel threatened by it, so the company might be looking to expand as much as it can.

If you’re interested, consider joining the waitlist. This way, you will be notified when Neon is accessible on Azure.