Investing in Neo4j | How to Buy Pre-IPO Shares

Neo4j provides AI-powered graph database management services designed to scale up to meet the needs of enterprise-level clientele. It combines proprietary AI algorithms with analytics, providing deeper insight and enabling businesses to streamline crucial tasks, including programming and development.

Since its launch, Neo4j has continued to expand operations. Today, it’s the leading graph database provider globally with a clientele spanning 80 Fortune 500 customers, 300k developers, and 170 strategic partnerships.

All of these factors have sparked interest in Neo4j shares. However, the company remains a privately owned and operated venture. As such, these shares can’t be purchased via regular brokers. Instead, you will need to navigate the secondary markets to gain access. Here’s what you need to know.

What is Neo4j?

Neo4j entered the market in 2007. Its founders, Emil Eifrem, Johan Svensson, and Peter Neubauer, envisioned the platform as the premier graph database provider. Notably, there are several types of databases, with the most popular options being relational, object-oriented, graph, and cloud databases.

Each of these databases is ideal for certain scenarios. For example, relational databases are ideal for text or other data that needs to be stored in rows and columns, enabling fast sorting and filtering when needed.

Object-oriented databases store data as objects, enabling users to show data flows when needed. Cloud databases are another option that provides exceptional accessibility via platforms like Amazon Aurora, Google Cloud Spanner. Neo4j saw limitations in these options, leading the developers to focus their platform on interconnecting data across networks via graph databases.

Graph Databases

Graph databases are similar to object-oriented databases in that they store the data as items. However, in a graph database, the data is stored as nodes and edges. This structure enables developers to show relationships, alongside properties for each.

Source – Neo4j

Graph databases are ideal when dealing with interconnected data stored in different formats across networks. It can help users make sense of complex relationships and organize data so that it can be retrieved efficiently.

Ideal for Social Networks

Graph databases are ideal for social networks, supply chain management, fraud detection, and other dynamic and complex relationship tracking needs. Notably, graph databases allow you to gain a better understanding of the contextual data while eliminating data silos.

Neo4j first demonstrated its graph database services in 2010 with its version 1 release. This version showed the power of Neo4j’s enhanced graph database and how it could enhance business operations. For one, it leveraged graph query languages like Cypher, enabling more complex programming and integrations.

In 2018, Neo4j branched into cloud database options. The company’s Aura service provides a full suite of options and works hand-in-hand with the company’s other products to provide secure access from anywhere globally. Notably, the firm has made a recent pivot towards AI-powered services.

AI Integration Powers New Generation of Features

The integration of AI agents and features helped Neo4j cement its position as the industry leader. The AI system seamlessly integrates vital features like combined vector search, automated query generation, and LLM summarization. These options enable businesses to manage context, boosting accuracy and explainability.

Uniquely, Neo4j’s graph databases provide AI agents with another level of comprehension. The database gives these systems full transparency and trackability, helping them to avoid hallucinations by providing a complete history of how they came to a certain conclusion.  Additionally, this data can be used to further enhance future AI algorithms’ capabilities.

Impressively, Neo4j  has spent millions improving its technology, and today, its unique features and services have helped to carve out a niche in this competitive market. As such, investors continue to demonstrate interest in its database features.

Historical Funding Rounds

Summary of Neo4j Funding:

Total Funding: Neo4j secured $581M across 10 funding rounds.

Largest Round: Neo4j’s largest funding round secured $325M  on June 17, 2021.

Investors: A total of 24 institutional investors and 1 Angel investor back Neo4j.

Latest Round: The latest funding round raised $66M and was a Series F round held in October 2021.

Funding Rounds Breakdown:

• 1 Seed
• 2 Early-Stage
• 6 Late-Stage
• 1 Grant

Key Investors:

Neo4j secured investment from Inovia Capital, Alanda Capital, One Peak, Eurazeo, Google Ventures, DTCP, Lightrock, Creandum, Greenbridge, Morgan Stanley, Eight Roads Ventures, European Union, Sunstone, Dawn Capital, Conor, and more.

Why Invest in Neo4j?

There are several reasons why the number of investors seeking to own Neo4j shares continues to rise. For one, the platform provides a plethora of helpful tools designed to streamline building intelligent Apps and AI services. Additionally, it’s fully ACID Compliant, ensuring your data remains safe.

Scalability

Neo4j was built from the ground up to service large enterprise-level clientele. Consequently, it’s the ideal solution when dealing with large datasets and complex queries. It can provide reliable transactions, consistent data, and enterprise-grade security protocols.

Flexible Options

There are several options for those seeking to utilize Neo4j to enhance their business operations. The company has a selection of subscriptions, ranging from an AuraDB business-critical option that includes daily backups, role-based access control, and more, all the way to a free option that gets you in the door.

Easy Deployment

In terms of deployment, businesses have several ways to integrate the system into their strategy. For one, it’s designed to work with existing infrastructure, including Google Cloud architecture. Notably, it’s the only high-security-level database provided to Google Cloud marketplace users. Additionally, it also operates as a NoSQL database system, making it a flexible alternative.

Community

Neo4j hosts gatherings and events designed to educate users. These community meet-ups empower users to expand their skills and learn about new products. There are often tips and courses on how to maximize your interactions and create next-generation graph-powered apps and AI systems.

Funding and Investor data sourced from Tracxn.

1. Pre-IPO Secondary Marketplace

Secondary markets are purpose-built exchanges that connect pre-IPO shareholders with potential investors. These marketplaces can offer these assets because they work closely with employees, early-stage investors, and venture capitalists, who are crucial to the company’s pre-IPO growth.

Investing in pre-IPO shares of Neo4j could offer strong returns if the company’s valuation increases following its IPO. It’s common for company valuations to increase following an IPO. As such, it makes sense to add pre-IPO shares to your portfolio before the firm announces plans to go public.

Secondary marketplaces have many requirements. Here are some concerns you should be made aware of:

Eligibility: This approach requires you to be an accredited investor, meaning you will have to show at least $1M in liquid assets to qualify for access.

2. Private Equity Firms

Private equity firms gain access to pre-IPO shares during investment rounds. They then offer these shares to high-net-worth accredited investors with a commission. Notably, private equity firms are known to have extra stipulations, including blocking the sale of shares for years in some cases.

3. Employee Equity Sales

Many consider employee equity sales as the best way to acquire pre-IPO shares in Neo4j. This method of acquiring pre-IPO shares requires you to connect with former employees. It’s common for companies to issue shares as part of an incentive package. Notably, this profit-sharing method has become more popular, leading to more pre-IPO share opportunities for investors.

Private Transactions: There are a lot of hoops you will need to jump through to complete a private pre-IPO transaction, including creating specific legal agreements, conducting valuations, and setting in place any limitations on the transfer of the asset.

Brokerage: Brokers will take a lot of the confusion out of the pre-IPO process. These professionals can guide you through each step, ensuring full compliance and avoiding common errors untrained professionals make.

There are several risks that you should consider before jumping into the pre-IPO shares investment arena. Here are the top concerns:

Liquidity Risk

If you are looking for an asset that you can sell right away, pre-IPO shares are not the best option.

These investments can include sales and transfer clauses that prevent the transfer of the asset until certain criteria, such as the IPO’s completion, are met. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.

Finding a Broker

If you meet the requirements and are comfortable with the risks, several platforms offer access to pre-IPO opportunities:

Forge Global: One of the largest private stock marketplaces, offering shares in late-stage startups like SpaceX, Stripe, and Databricks. Minimums typically start around $100,000.

EquityZen: A popular platform allowing accredited investors to buy into private companies with minimums as low as $5,000. Past offerings include companies like Discord and UiPath.

Rainmaker Securities: A full-service broker that helps source and negotiate private share sales, including opportunities in companies like OpenAI, Stripe, and Palantir.

Hiive: A newer platform with live bid/ask pricing for hundreds of private companies. Transparent and low-fee, with minimums starting around $25,000.

MicroVentures: Offers pooled access to late-stage companies through special purpose vehicles (SPVs), including past investments in SpaceX and Instacart.

EquityBee: Allows investors to fund employee stock option exercises at startups, often at discounted valuations, with minimums around $10,000.

Augment: A digital-first marketplace showing real-time pricing for pre-IPO shares, targeting tech-savvy investors and offering lower transaction fees.

StartEngine Private: Launched in late 2023, this platform offers accredited investors access to Regulation D offerings in later-stage, venture-backed companies. In its first nine months, it generated $16.5 million in revenue, with average investments of around $32,000

Important: Always perform thorough due diligence and consult a financial advisor before investing in private company shares.

Valuation of Neo4j and Future IPO

Neo4j qualified for Unicorn status after the company secured a $2B valuation on June 17, 2021. The company managed to secure this value through a combination of factors. For one, it pioneered graph database technology, helping businesses get the most out of complex networks.

Additionally, the company’s pivot towards AI services has opened the door for more usability and convenience. These features enable anyone to gain deep insight into their business without the need to code or program, enabling businesses to use 3D visualizations to conceptualize complex relationships.

Investors holding Neo4j shares seek to capitalize on the company’s strong positioning and growing demand for its products. Considering how the market continues to increase in complexity, there’s definitely room for the firm to expand operations into new features based on its proprietary models.

Investing Neo4j Pre-IPO Shares | Conclusion

Holding Neo4j shares opens the door for potential growth as the company continues to pioneer graph database technology. If it can continue on its course, securing top-level clientele, the company will likely experience further growth in operations and share prices.

However, you need to consult a financial expert before making any pre-IPO investments. This step will ensure that you remain within your risk appetite and avoid common missteps made by new investors. For those who complete their research and qualify for these shares, lots of future opportunities await.

Learn about Other Pre-IPO Opportunities Now

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Pre-IPO shares are typically available only to accredited investors and carry significant risk. Always perform thorough due diligence and consult a financial advisor or legal expert before making investment decisions.