Swedish company accelerates toward IPO with $50M investment at $2B valuation

Neo4j, the Malmö-founded graph database pioneer, has raised $50 million from Noteus Partners, reinforcing its $2 billion valuation as it prepares for a potential IPO. The investment strengthens Neo4j’s balance sheet amidst growing demand for its GenAI-ready graph solutions, cloud expansion, and deepened partnerships. With $200 million in annual recurring revenue, Neo4j leads the graph database market, critical for AI systems managing interconnected data. The funding will support continued innovation in knowledge graphs and enterprise AI, cementing Neo4j’s position as a cornerstone in the rapidly growing generative AI ecosystem.

Neo4j®, the world’s leading graph database and analytics company, announced that it has surpassed $200 million in annual recurring revenue (ARR), doubling its ARR over the past 3 years. The company is on track to be cash flow positive in the coming quarters, driven by its leadership in the expanding graph technology market, which is critical for improving the accuracy, transparency, and explainability of Generative AI (GenAI) results.

Neo4j grew rapidly this year as organizations recognized graph databases as essential infrastructure for AI systems that leverage vast amounts of interconnected data. Neo4j serves as the optimized database for these applications. Growth was also driven by enterprise demand for Neo4j’s cloud offering which has increased fivefold over the last three years, and partnership traction with leading cloud hyperscalers and ecosystem leaders. “By 2025, graph technologies will be used in 80% of data and analytics innovations, up from 10% in 2021, facilitating rapid decision-making across the enterprise,” predicts Gartner® in its Exploring the Top Use Cases for Graph Analytics report, May 10, 2024.

Neo4j leads the graph database management systems (DBMS) category with a 44% market share, based on an analysis by Cupole Consulting Group. Cupole estimates the total addressable market for the broader DBMS category at $110 billion in 2024, with graph DBMS growing at 32.6%+ CAGR driven by cloud adoption and emerging AI use cases.

Neo4j is used by 84% of all Fortune 100 companies and 58% of the Fortune 500. Examples include Daimler, Dun & Bradstreet, EY, IBM, Merck, NASA, UBS, Walmart, and others.

Graph databases enable companies to store and query data in a way that mirrors how real-world entities are connected. Data is expressed as a knowledge graph, which grounds large language models (LLMs) in facts and rich context and gives AI systems better, faster access to relevant data critical for generating high-quality outputs.

Neo4j is also a leader in GraphRAG, a technique that enables LLMs to retrieve data from external sources, augmenting these systems with knowledge and preventing hallucinations. Gartner noted the importance of GraphRAG in its Hype CycleTM For AI in Software Engineering, 2024 report: “RAG techniques in an enterprise context suffer from problems related to the veracity and completeness of responses caused by limitations in the accuracy of retrieval, contextual understanding, and response coherence. KGs (Knowledge Graphs), a well-established technology, can represent data held within documents and the metadata relating to the documents. Combining both aspects allows RAG applications to retrieve text based on the similarity to the question and contextual representation of the query and corpus, improving response accuracy.”

Neo4j enables builders to make their data GenAI-ready and create applications faster and easier with outcomes that are accurate, transparent, and explainable to normal humans. In 2023, Neo4j incorporated native vector search into its core database capabilities for richer GenAI insights. In 2024, Neo4j brought its graph data science solution to Snowflake AI Data Cloud, expanded its alliance with Deloitte, and continues to offer native integrations with LLM offerings across all major hyperscalers that are current with their updates. Neo4j also transformed its cloud portfolio this year to accelerate graph adoption and GenAI for the enterprise.

The result has enabled Neo4j to advance its position as the category leader and the preferred graph partner across all major cloud service providers for its comprehensive offering, deployment flexibility, analytics, and strong community support, and accelerated further with GenAI.

Neo4j was named a Visionary in the 2023 Gartner® Magic Quadrant™ for Cloud Database Management Systems among 19 other recognized global DBMS vendors. Neo4j was also ranked this year as a Strong Performer among 14 top vendors in The Forrester Wave™: Vector Databases, Q3 2024.

Neo4j plans to add new GenAI features to its core offering, expand its capabilities for mainstream cloud adoption, and deepen partnerships to serve as the default graph analytics and GraphRAG layer.

The company recently secured $50 million in capital from Noteus Partners, a European specialist growth equity investment firm. While Neo4j is well capitalized and does not need the capital to run its business, the investment strengthens its balance sheet in the current macroeconomic climate, reaffirms the company’s $2 billion valuation, and underscores the Neo4j’s commitment to partnering with organizations it trusts and believes in.

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