Software startup Observe raises $156 million in Sutter Hill-led fundraise
(Reuters) -Observe, whose tools help detect and resolve issues in app systems, said it has raised $156 million in a funding round led by private equity firm Sutter Hill Ventures as demand rises for software that helps businesses manage a growing deluge of data.
The San Mateo, California-based startup has pitched itself as a one-stop alternative to data monitoring and analytics tools from Datadog and Cisco-owned Splunk, aiming to simplify how businesses detect failures in complex systems.
The Series C round was joined by existing investors Madrona Ventures, Alumni Ventures as well as the venture capital arms of cloud company Snowflake and U.S. bank Capital One, Observe said on Wednesday, declining to share its valuation
Observe said it plans to use the funds to accelerate product development and expand its North American presence, including hiring more sales staff to grow its nearly 200-strong team.
It stores all customer data in a single, central "lake" built on Snowflake and offers a lower-cost alternative to larger rivals, a strategy that has helped it attract about 100 clients, including Commonwealth Bank of Australia.
"We've deliberately, I'd say over the last 18 months, moved our go-to-market away from the smaller organizations. So, we've been focused on companies operating at scale," CEO Jeremy Burton said in an interview. "Capital One is our biggest customer. But Commonwealth Bank actually is very close."
Observe has tripled its revenue over the past year and has a 93% gross retention and 180% net revenue retention, the company said, in signs of customer loyalty in a market where clients are chasing lower costs.
The startup, which raised $115 million in a Series B round last year, is using artificial intelligence to power an assistant that helps users query data in plain English and diagnose issues without writing complex code.
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