Neo4j’s $325M funding round lifts fortunes of graph database industry

In a major shot in the arm for the graph database industry, market leader Neo4j Inc. today announced it has raised $325 million in what it says is the largest-ever venture capital round for a private database company.

The Series F venture capital round brings its total funding to $515 million and bestows upon it a market capitalization of more than $2 billion.

The 14-year-old company, which sells enterprise and cloud versions of an open-source project by the same name, dwelt in relative obscurity until a few years ago when graph databases began to capture the attention of businesses for the unique ability to navigate relationships between data elements and discover linkages that are difficult or impossible to define with conventional SQL queries and relational data stores. Interest has intensified with the rapid shift of analytics and business intelligence processing to the cloud.

Gartner Inc. has forecast that graph technologies will be used in 80% of data and analytics projects by 2025, up from just 10% this year. Forrester Research Inc. estimates that 38% of enterprises have adopted graph technology and that the number is likely to double by 2026, said Noel Yuhanna, a Forrester vice president and principal analyst. The new funding “will put to rest criticism that standalone graph database market will not survive,” he said.

“This is a powerful show of support from the U.S. investment sector,” said Carl Olofson, research vice president for data management software at International Data Corp. “I think we’re just at the beginning. The amount of business [graph database companies] are doing is nothing compared to the potential.”

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