Neon Inc. a two-year-old startup that’s building a serverless version of the open-source Postgres database management system, said today that it has raised $46 million in Series B funding, bringing its total fundraising to $104 million.

Postgres, which is also known as PostgreSQL, grew out of the commercial Ingres DBMS developed in the 1980s and has been gaining momentum recently for its performance, flexibility and low cost compared with commercial competitors. Stack Overflow Internet Services Inc.’s most recent developer survey found the elephant-branded PostgreSQL surpassed MySQL as the preferred and most-admired DBMS among its 76,000-plus respondents.

Neon is positioned as a serverless open-source alternative to AWS Aurora Postgres. It separates storage from computing and substitutes the PostgreSQL storage layer by redistributing data across a cluster of nodes. This makes storage capacity virtually unlimited and allows users to save money by assigning little-used storage to low-cost tiers. Serverless computing enables services to be spun up and shut down in seconds without the need to provision infrastructure.

Branching, which Neon calls “copy on write,” is a particularly powerful feature that allows developers to create copies of the production database in real time for such purposes as testing, backup, analytics and other purposes. Unlike snapshots, which are also instant copies of the database, branches are writable and therefore more flexible.

Easing the developer’s burden

“With Neon, developers no longer have to deal with the burden of database management,” Tim Tully, a partner at Menlo Ventures Management LP, said in a statement. “Instead, they are empowered to concentrate on features, latency and development speed.”

Neon claims to have 130,000 databases in use, although it doesn’t specify how many were paid for. Billing was only initiated in March and “we are aligned on growth being a more important goal than profitability for the next few years,” a spokesman said. “We are targeting developer adoption first and foremost, so our larger customers are almost all partners who embed our Postgres in their products,” such as Vercel Inc..

The company offers a free version of its cloud service with one project, up to 10 branches, 3 gigabytes of storage in each branch and a shared computing instance with 1 gigabyte of RAM.

Menlo Ventures led the funding round with a $30 million check. Other participants include existing investors Founders Fund LLC, General Catalyst Partners LLC, GGV Management LLC’s venture capital arm, Khosla Ventures LLC, Snowflake Ventures LLC, Databricks Inc. and entrepreneur Elad Gil. Khosla incubated Neon and furnished its current CEO, Nikita Shamgunov, who formerly led MemSQL Inc.

Neon’s previous funding round was a $30 million Series A almost exactly a year ago. It said it will use the new tranche to improve the developer experience by “enhancing the user interface, introducing exciting visible features, funding technological partnerships and other go-to-market efforts,” including sponsorship of artificial intelligence-related research and development. The company currently employs 60 people and plans to hire 35 more by the end of the year.

The company doesn’t need the funding right now but “our philosophy is to raise it when you can, not when you have to,” a spokesman said. “We have established a clear market position as the leading Postgres-as-a-service vendor outside of the hyperscalers and these funds will be used to cement that position.”

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