Observe, a data observability platform, raises $115 million with Snowflake investment


Enterprises today store and use data across an ever-increasing number of applications and locations – making it challenging, if not impossible, to manage and query that data in a holistic manner. This provides an opportunity for startups to build tools to connect that fragmentation together, and today one of them – Observe – is announcing $112 million in funding in the face of strong demand for its technology. The Series B values ​​the startup at between $400 million and $500 million, sources told TechCrunch. (Will not comment on figures.)

Observe – not to be confused with Observation.AI – creates observability tools for machine-generated data that aim to break down data silos, making it useful for developers to understand how apps are working and being used. Are and are potentially failing. It was built from the ground up tightly integrated with data-as-a-service giant Snowflake. Now, that strategic partner is becoming a strategic investor: Snowflake joins Series B lead Sutter Hill Ventures, as well as previous backers Capital One Ventures and Madrona in this round.

This round is entirely equity, but a portion of it includes the conversion of previous debt that the company raised (we raised $50 million of debt in October 2023). CEO Jeremy Burton said in an interview that the plan is to cover the remaining debt in an upcoming Series C.

This latest roundup highlights some of the important trends in the market right now.

The first of these is the fact that enterprises are under great pressure to find more cost-effective solutions to power their technology.

The pressure to pay more efficiently for the services used is driving the growth of software as a service at the application level, and now the growth of platforms like Observe – and Snowflake, and AWS, and others – indicates that How comprehensive it is is that the model is also at the data level. (The company charges primarily for queries rather than data ingestion, meaning companies pay for what they use.)

Putting silos of semi-structured data into a unified “lake” such as Observable also helps reduce the time and effort – and thus cost – required to query that data.

The second is that enterprises are looking to get more out of their data. The main use case for Observe today is to analyze data to troubleshoot when an application is not working as it should. Last year the company launched a generative AI tool that tells users what it can query and what’s to come. This is essentially pushing customers to use the tool for more than just troubleshooting in areas like marketing and security.

“You can also get security-related data or customer experience-related data,” Bruton said. “Really, we don’t care what the data is. It’s very permissive.” The company today works with third parties to extend that work but does not rule out native applications in these and other areas.

As Snowflake continues to grow, it’s interesting that it is choosing to invest in building a partner on its platform rather than taking the step into building (or acquiring) a data observation tool to offer directly to customers.

Stephen Williams, Snowflake’s vice president of corporate development, who runs Snowflake Ventures, said in an interview with TechCrunch that the company is currently seeing a lot of growth in its core database business. This means that a business like Observe is more attractive for it to help generate more activity on that front along with others in the same sector. In other words, Snowflake doesn’t want to compete against or cannibalize third-party businesses that are bringing more business and revenue to its platform overall.

“We see this as a lever to unlock new customers,” he said of Snowflake Ventures’ investment thesis. But in any case, investing in Observ becomes a tacit endorsement of it against other competitors in the field, ranging from giants like Splunk to other startups like Acceldata. “thHere is the software and data overview. [In data,] There’s nothing right now that competes with the Observer,” Williams said.

The startup is not disclosing revenue but says ARR has increased Net revenue retention is up 171% compared to a year ago and up 174%.

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