Observe, a data observation platform, raised $115 million thanks to Snowflake’s investment

Enterprises today store and use data in an increasing variety of applications and locations, making it difficult, if not unattainable, to comprehensively manage and query that data. This means a chance for startups constructing tools to connect this fragmentation, and today certainly one of them – Observe — proclaims $112 million in funding due to strong demand for its technology. According to TechCrunch sources, Series B values ​​the startup at $400-500 million. (The follower wouldn’t comment on the drawing.)

Observe – not to be confused with Observe.AI – creates machine-generated data observability tools geared toward breaking down data silos. It was built from the bottom up and tightly integrated with data-as-a-service giant Snowflake. Now this strategic partner is becoming a strategic investor: Snowflake joined the round together with Series B leader Sutter Hill Ventures and other participants and former backers Capital One Ventures and Madrona.

The round is all equity, but a portion includes the conversion of previous debt incurred by the corporate (we covered one $50 million debt raise in October 2023). CEO Jeremy Burton said in an interview that the plan is to cover the remaining debt within the upcoming Series C.

The latest round highlights some significant market currents.

The first is the incontrovertible fact that corporations are under great pressure to find more cost effective solutions for the usage of their technology.

The push to pay for custom services more efficiently is driving the expansion of software-as-a-service at the appliance layer, and now the rise of platforms like Observe—and Snowflake, AWS, and others—shows how this pervasive model also exists on the data layer. (The company charges mainly for queries, not for data acquisition, which implies they pay for what they use.)

Bringing silos of semi-structured data into a unified “lake,” as Observe does, also helps reduce the effort and time – and subsequently cost – needed to query that data.

Second, enterprises want to get more out of their data. Observe’s primary use today is data evaluation to troubleshoot problems when an application is not working because it should. Last yr, the corporate launched a generative artificial intelligence tool that tells users what they will ask and what’s going to occur next. This also inevitably leads to customers using the tool for greater than just solving problems in areas reminiscent of marketing and security.

“You can also ingest data related to security or customer experience,” Bruton said. “We don’t actually care what the data is. It’s very liberal.” The company is currently working with third-party corporations to improve this work, but doesn’t rule out that native applications will appear in these and other areas in the long run.

As Snowflake continues to grow and ingest increasingly more data, it’s interesting that it chooses to put money into constructing a partner on its platform moderately than constructing (or acquiring) data observation tools to offer directly to customers.

For now, Stefan Williams, Snowflake’s vice chairman of corporate development who runs Snowflake Ventures, says he’s seeing significant growth in his core database business for now, and a company like Observe is more attractive since it helps generate more revenue for it. activities on this area, alongside others in the identical space. In other words, it doesn’t want to compete with key business partners.

“We see it as leverage to unlock new customers,” he said in an interview. It appears that it decided to put money into Observe as a tacit endorsement of other competitors within the industry, from giants like Splunk to other startups like Acceldata. “ThIt’s software and data observability. (In data) nothing currently competes with Observe.

The startup doesn’t disclose revenues, but claims that ARR has increased 171%, and net revenue retention is 174% higher compared to last yr.