Neo Technology Bags $20M As Graph Databases Get Hot

Neo Technology, developers of the neo4j graph database have been growing steadily, and investors have noticed, rewarding them with a $20M Series C pay day.

Creandum led the round joined by Dawn Capital and current investors Fidelity Growth Partners Europe, Sunstone Capital and Conor Venture Partners.

The company’s last funding round was in November, 2012 for $11M, and this latest cash brings the total investment to $44.1M.

You might not have heard of graph databases, but they play an important role in building relationships between data. The most common example is Facebook’s social graph, which consists of the connections between you and your friends in the network. In eCommerce, it’s what makes the connection that “people who bought this, might also like that” on Amazon and other eCommerce sites.

In fact, Neo Technologies counts Walmart as one its clients and TechCrunch’s sister company, Crunchbase uses the neo4j graph database to understand connections between companies.

Company co-founder and CEO Emil Eifrem explained there are a couple of major use cases for neo4j. First of all, a company like Walmart will build an application on top of it to find those types of commercial connections between buyers.

The other use case is what’s known as Master Data Management. In this instance, large companies are looking to pull a bunch of data together from disparate sources to have one true record, such as a single view of a customer –but it’s easier said than done.

“This is a very hairy problem,” Eifrem said. “It’s very difficult to do. Data is rapidly changing.” He says the best way to solve this is using the graph model.

Eifrem said the company began life in 2007 in Sweden as an open source product and he took the first couple of years building out the product and establishing a community. He says today, the community remains a vital part of the company, but by 2011 the company began to get some traction and it was time to take it commercial.

Eifrem packed up his bags and moved to California, leaving his engineering operation behind in Sweden where it remains today. At that point, there were a couple of transitions. On a personal level, he moved to another country and on a professional one, he was pivoting from a purely open source product with a bit of commercial business to a commercial company that happened to be based on open source.

Eifrem reports he had spent a year in the States in the mid-90s as a student and he had friends here, so that part of the transition wasn’t as difficult as you might imagine. As for the company, he said even though there were some challenges shifting the business to a commercially-focused entity, this was the vision he had all along.

“Even though we were open source, we were always focused on being a big company. If you want to have impact,  you need a strong organization supporting open source,” Eifrem told TechCrunch.

Eifrem says even though graph databases are a small piece of the overall database market, it’s growing fast, and as his own company grows, he says that has been attracting the attention of investors.

Today, the company has between 70 and 80 employees, and using this new infusion of cash from today’s announcement, he hopes to ramp up to 120 by the end of the year. He says they have been doubling or tripling revenue every year since the 2011 transition, and now he’s starting to see the positive results of that growth.

As he said, “When you double with significant growth you are talking much bigger scale.” And it didn’t escape investors’ notice.