Arize AI Secures $70 Million in Funding to Advance AI Observability and Evaluation

Arize AI Secures USD 70 Million, Expands Partnership with Microsoft

Arize Phoenix, the company's open-source tool, now sees over two million monthly downloads. Berkeley-headquartered AI observability and LLM evaluation company Arize AI has raised $70 million in a Series C funding round led by Adams Street Partners. The largest-ever investment in AI observability saw participation from M12 (Microsoft's venture fund), Sinewave Ventures, OMERS Ventures, Datadog, PagerDuty, Industry Ventures, and Archerman Capital, alongside existing backers such as Foundation Capital, Battery Ventures, TCV, and Swift Ventures. Also Read: Glassbox Raises USD 1.2 Million to Transform Spreadsheet for AI-Enabled Corporate Transactions "AI adoption is skyrocketing," the company said, noting that business spending surpassed USD 13.8 billion in 2024, with 68 percent of enterprises planning to invest between USD 50 million and USD 250 million in generative AI in 2025. While AI models are more powerful, LLMs struggle to perform reliably in real-world applications like voice assistants, the company said. According to the official release, Arize's OpenEvals research highlights a major blind spot: "LLMs struggle to reliably assess correctness of synthetic datasets compared to non-synthetic data -- a major blind spot as enterprises rush to scale generative AI." Arize states that these findings highlight serious risks in AI model training and self-improvement loops, where unchecked errors in synthetic data can compound over time. With Arize's AI observability and LLM evaluation platform, the company says teams can test, troubleshoot, and course-correct AI systems before failures escalate into real-world consequences. This is particularly important as enterprises race to implement semi-autonomous multi-agent systems, voice assistants, and increasingly sophisticated consumer-facing AI applications, the AI startup noted. "Building AI is easy. Making it work in the real world is the hard part," said Jason Lopatecki, CEO and Co-Founder of Arize AI. "Enterprises can't afford to deploy unreliable AI. Engineering teams need better infrastructure to test, evaluate, and troubleshoot their models before they impact customers. That's exactly what Arize delivers -- whether through our enterprise platform, Arize AX, or our open-source offering, Arize Phoenix." "As AI research and real-world applications accelerate, Arize will continue to pioneer new tools, like our recent first-to-market launch of audio evaluation for voice assistants, to help engineers working on these systems better evaluation, debug, and improve what they build," added Aparna Dhinakaran, Chief Product Officer and Co-Founder of Arize. Also Read: Positron Raises USD 23.5 Million to Deliver Made-In-America AI Chips Since its 2020 launch, Arize said it has become an AI observability provider for enterprises and government agencies -- including Booking.com, Conde Nast, Duolingo, Hyatt, PepsiCo, Priceline, TripAdvisor, Uber, and Wayfair, among hundreds more. Its open-source tool, Arize Phoenix, now sees over two million monthly downloads. Arize said its partnership with Microsoft is also expanding, with M12's investment reinforcing a long-standing collaboration. The company recently launched deeper integrations with Azure AI Studio and the Azure AI Foundry portal, SDK, and CLI, so AI engineers can easily integrate observability and evaluation into their workflows. "We believe AI observability is the missing piece in making AI truly enterprise-ready," said Fred Wang, Partner at Adams Street Partners. "As AI adoption accelerates, companies need robust, cohesive tools to ensure their AI systems are performant, reliable, and aligned with business goals. Through our research and diligence in this market, we believe Arize AI has built the category-defining platform for AI observability and evaluation, trusted by leading enterprises and AI-first organizations." "Arize AI's innovative approach to AI observability and LLM evaluation is transforming the way enterprises deploy and manage AI systems. Our investment reflects our confidence in their ability to set new standards in the industry and empower AI engineers and developers to achieve real-world results," said Todd Graham, Managing Partner at M12. "Tripadvisor's billion-plus reviews and contributions are becoming even more important in a world of AI search and recommendations where travel experiences are more conversational, personal and even agentic. As we build out new AI products and capabilities, having the right infrastructure in place to evaluate and observe AI is important. Arize has been a valuable partner on that front," said Rahul Todkar, Head of Data and AI at Tripadvisor. Also Read: AI-Powered Running Startup Ochy Secures USD 1.7 Million, Announces Adidas adiClub Integration "With GenAI, we're facilitating more tailored experiences that adapt and respond to travellers' needs faster than ever before. As we continue to innovate, our technical teams blend an approach of pioneering new tools in-house and using platforms like Arize to help in testing, evaluating and tracing new AI-powered applications and workflows," said Jeroen Hofman, ML Engineering Manager at Booking. "Arize AI deserves a lot of credit for pioneering AI observability and creating a de facto standard for enterprises that want to achieve real-world results with generative AI," said Brett Wilson, General Partner at Swift Ventures. "We're proud to continue to back the company as it scales." Also Read: Fluidstack to Build AI Supercomputer in France with EUR 10 Billion Investment According to the official release, Arize AI is a unified AI observability and LLM evaluation platform that helps teams develop and maintain more successful AI. Arize's automated monitoring and observability platform enables teams to quickly detect issues as they arise, troubleshoot their causes, and enhance overall performance across both traditional ML and generative AI applications.

Arize AI Secures $70Mn to Scale its Unified AI Observability Platform

Arize AI aims to use the funding to fix issues with LLMs and AI Agents in the real world. Arize AI, a company focusing on AI observability and LLM evaluation, has announced a remarkable $70 million Series C funding round. The company claims this investment marks the largest ever in the realm of AI observability. The investment was spearheaded by Adams Street Partners, with contributions from other investors, including M12 (Microsoft's venture fund), Sinewave Ventures, OMERS Ventures, Datadog, PagerDuty, Industry Ventures, and Archerman Capital. Arize AI's recent research initiative, OpenEvals, has revealed that LLMs often struggle to accurately evaluate synthetic datasets -- data generated by other AI models -- compared to non-synthetic data. Furthermore, the results from the research state that LLMs are still unpredictable, difficult to troubleshoot, and prone to failure. Hence, with the company's offering, organisations can course-correct AI systems before they do any damage in a real-world setting. Jason Lopatecki, CEO and co-founder of Arize AI, emphasised the importance of reliability in AI systems: "Building AI is easy. Making it work in the real world is the hard part. Enterprises can't afford to deploy unreliable AI." He stressed that engineering teams require robust infrastructure to test and troubleshoot their models effectively before they impact customers. The company mentions that its platform has helped enterprises like Uber, Duolingo, TripAdvisor, and more. And, they also highlight that their open source offering, Arize Phoenix, is the most widely adopted AI observability and evaluation library for development. In a statement, Arize says that the partnership with Microsoft is also set to deepen, with M12's investment reinforcing their collaboration, which will result in better integrations with the Azure AI platform. Aparna Dhinakaran, the chief product officer and co-founder of Arize, shared a bit about their future vision, "As AI research and real-world applications accelerate, Arize will continue to pioneer new tools, like our recent first-to-market launch of audio evaluation for voice assistants, to help engineers working on these systems better evaluation, debug, and improve what they build." With more companies focusing on solving issues related to AI, such as the interesting concept of using AI to fix AI, the experience for businesses, clients, and customers should improve.

Arize AI hopes it has first-mover advantage in AI observability | TechCrunch

There are numerous observability platforms that monitor and evaluate cloud software, like Dynatrace and ServiceNow, which flag potential code errors or failures so engineers can find and fix them. Arize AI says it is bringing that same approach to AI models and applications. Arize is an AI observability platform that helps companies evaluate their AI products as they are building them and then monitor those products for errors and issues once they are up and running. Arize's platform works with a variety of AI applications, from machine learning and computer vision to generative AI. Jason Lopatecki, Arize co-founder and CEO (pictured above left), told TechCrunch that Arize uses a "council of judges" approach to monitor and evaluate AI. This approach includes evaluating AI with different AI models -- which Lopatecki joked is, yes, very meta -- in addition to having humans in the loop. The idea behind Arize came from Lopatecki's previous company TubeMogul, a brand advertising company, which was acquired by Adobe for over $500 million in 2016. Everything at TubeMogul ran on AI, Lopatecki said, and when it would break it would be a "big deal" since the technology was so complicated. Aparna Dhinakaran, a co-founder and CPO at Arize (pictured above right), who met Lopatecki through TubeMogul, had run into similar issues developing language models without having the proper tools to test and evaluate as she built. "We both saw the problem space and really had that idea that AI is going to be high stakes in more and more organizations everywhere," Lopatecki said. "It's so complicated, it's really hard to tell what it's doing, when it's broken and how to fix it." The pair launched Arize in 2019 with an initial focus on the AI trend of the day: predictive machine learning. Lopatecki said that when Arize got started, it was really just an idea. Today, five years later, the market gets the problem and Arize's platform works with everything from AI agents to generative AI. "So the last two years have been, I would say, explosive, explosive in growth," Lopatecki said. "Simply because [AI] is more accessible. Everyone's a prompt engineer. Every engineer is a prompt engineer. Everyone is integrating [AI] products into their product lines." Arize now works with enterprises including Uber, Klaviyo, and Tripadvisor, among others. The company also has an open source offering, Arize Phoenix, which has more than two million monthly downloads. The Berkeley, California-based company recently raised a $70 million Series C round led by Adams Street Partners with participation from M12, Sinewave Ventures, and OMERS Ventures, among other investors, in addition to strategic backers including Datadog and PagerDuty. This brings the company's total funding to more than $130 million to date. The company plans to put its latest round of funding toward improving its main product and doubling down on growing AI segments, including voice and AI agents. Dhinakaran joked that while their open-source product may be their biggest competitor, the company plans to put more money into developing that product, too. "Our open source Phoenix has just been growing, it's been growing massively, and so I think we love that. We love open source," Dhinakaran said. The AI observability and evaluation space is becoming increasingly crowded. Dhinakaran said that they think that Arize offers both pre- and post-launch evaluations, and can be used across a variety of different AI applications, which helps the company stand out; although, there are companies with very similar offerings like Galileo, which has raised $68 million in venture funding, and Patronus AI, which has raised $20 million in funding. "It's so hard to build the [infrastructure] to do this, right?" Lopatecki said. "It's kind of why I think the Microsofts and Datadogs are investing in us, or making a bet on us. I think people also now see how big this market can be. You're going to have a lot of little guys. You're gonna have big people jumping in it, and I expect it to be a fast, growing, large market."