Observe Raises $156M to Advance AI-Native Observability in Software Monitoring

Observe Secures $156 Million in Series C Funding

Observe, a San Mateo-based software observability platform, has successfully raised $156 million in a Series C funding round led by Sutter Hill Ventures 1

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. The funding round also saw participation from existing investors including Madrona Ventures, Alumni Ventures, and strategic investors such as Snowflake and Capital One 1

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AI-Native Observability Platform

Founded in 2017, Observe has positioned itself as a one-stop alternative to data monitoring and analytics tools from competitors like Datadog and Splunk 2

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. The company's platform is designed to simplify how businesses detect and resolve issues in complex software systems 1

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Observe's AI-native observability platform consists of three key components 3

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1. O11y Data Lake: A scalable, low-cost data lake optimized for collecting and storing real-time observability data.
2. O11y Knowledge Graph: Provides a contextual, real-time model of the customer's entire IT system.
3. O11y AI SRE: An AI component that automates the investigative process and assists with complex troubleshooting.

Adapting to AI Advancements

CEO Jeremy Burton highlighted the impact of AI on the observability landscape, stating, "In a few years, you're going to have hundreds or thousands of agents on your network that are all interacting with employees or interacting with each other" 1

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. To address this, Observe released a Model Context Protocol (MCP) server earlier this year, allowing developers to access observability data from AI coding tools and LLMs 1

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Impressive Growth and Customer Base

Observe has shown significant growth, nearly tripling its revenue in 2024 and maintaining a 93% gross retention rate 1

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. The company has attracted about 100 clients, including large enterprises such as Capital One, Paramount, Dialpad, and Commonwealth Bank of Australia 1

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Future Plans and Industry Impact

With the new funding, Observe plans to accelerate product development, expand its North American presence, and grow its team of nearly 200 employees 2

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. The company is also working towards supporting Apache Iceberg, an open-source data table format, by the end of the year 1

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Burton emphasized the company's vision for the future of observability, stating, "We believe the winners in this next era of observability won't be the ones with the most dashboards. They'll be the ones that surface the right context and give enterprises the ability to correlate signals at massive scale, without breaking the bank" 3

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As Observe continues to innovate in the AI-driven observability space, it aims to address the growing complexity of software systems and help businesses manage the increasing volume of data generated by modern applications.