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Data observation platform Observe raises $115 million through Snowflake investment | TechCrunch


Today, enterprises store and consume data in an increasing number of applications and locations, making it challenging, if not impossible, to manage and query this data in a holistic manner. This provides an opportunity for startups to build tools to piece the pieces together. One of them today—— observe — announced $112 million in funding following strong demand for its technology. Sources told TechCrunch that the Series B round values ​​the startup at between $400 million and $500 million. (Observe would not comment on this figure.)

Observe – don’t interact with Observation.AI – Establishing observability tools for machine-generated data aims to break down data silos and help developers understand how applications operate, use and potentially fail. It was built from the ground up, tightly integrated with data-as-a-service into services giant Snowflake. Now, the strategic partner is becoming a strategic investor: Snowflake joins Series B lead investor Sutter Hill Ventures and previous backers Capital One Ventures and Madrona received this round of financing.

The round was all equity, but part of it included a conversion of debt the company had previously raised (we covered Raise $50 million in debt in October 2023) CEO Jeremy Burton said in an interview that the plan is to pay off remaining debt in an upcoming Series C round of financing.

The latest round of funding reflects some important trends in the market right now.

First, companies are under intense pressure to find more cost-effective solutions to operate their technology.

The push to pay more efficiently for services used has been driving the growth of software-as-a-service at the application layer, and now the growth of platforms like Observe, Snowflake, AWS, and others shows how this model is prevalent at the data layer as well. (The company charges primarily for queries rather than data ingestion, meaning companies pay for what they use.)

Ingesting silos of semi-structured data into a unified “lake” like Observe also helps reduce the time and effort required to query that data, thereby reducing costs.

Second, businesses want to get more from their data. The main use case for Observe today is to analyze data in order to troubleshoot when an application is not functioning properly. Last year, the company launched a generative AI tool that lets users know what it can query and what’s coming. This also inevitably leads to customers using 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. “The truth is, we don’t care what the data is. It’s very permissive.” The company currently works with third parties to enhance This works, but he doesn’t rule out native applications in these and other areas.

As Snowflake continues to grow, it’s interesting that it has chosen to invest in partners built on its platform rather than set out to build (or acquire) data observability tools to serve customers directly.

Stefan Williams, Snowflake’s vice president of corporate development and operator of Snowflake Ventures, said in an interview with TechCrunch that the company’s core database business has seen significant growth. This means businesses like Observe are more attractive to it and can help it generate more revenue. In other words, Snowflake doesn’t want to compete with or cannibalize third-party businesses that are bringing more business and revenue to its platform.

“We see it as leverage to unlock new customers,” he said of Snowflake Ventures’ investment thesis. Regardless, investing in Observe becomes a tacit argument against other competitors in the space, including giants like Splunk. Show approval.to other startups, e.g. Accelerate data“ThThis is software and data observability. [In data,] There’s nothing that can compete with Observe right now,” Williams added.

The startup didn’t disclose revenue but said ARR was up Compared to a year ago, that was up 171%, and net income retention was up 174%.



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