Today, businesses store and use data in an increasing number of applications and locations, making it difficult, if not impossible, to manage and query that data holistically. That means an opportunity for new companies to create tools to unite that fragmentation, and today one of them: Notice – is announcing $112 million in funding following strong demand for its technology. The Series B values the startup at between $400 million and $500 million, sources tell TechCrunch. (Observer declined to comment on the figure.)
Observe – do not confuse with Observe.AI – creates observability tools for machine-generated data that aim to break down data silos, and was built from the ground up tightly integrated with data-as-a-service giant Snowflake. Now, this strategic partner is becoming a strategic investor: Snowflake has joined the round alongside Series B leader Sutter Hill Ventures and other participants and previous backers Capital One Ventures and Madrona.
The round is all equity, but part includes a conversion of previous debt the company had raised (we cover a debt increase of $50 million in October 2023). CEO Jeremy Burton said in an interview that the plan is to cover the remaining debt in an upcoming Series C.
This latest round speaks to some important currents in the market right now.
The first of these is the fact that companies are under great pressure to find more cost-effective solutions to run their technology.
The push to pay more efficiently for the services you use has been driving the growth of software as a service at the application layer, and now the growth of platforms like Observe (and Snowflake, AWS, and others) points to how that model Ubiquitous is also found in the data layer. (The company charges primarily for queries rather than data ingestion, meaning companies pay for what they use.)
Incorporating semi-structured data silos into a unified “lake” as Observe does also helps reduce the time and effort (and therefore cost) required to query that data.
The second is that companies are looking to get more out of their data. The main use case for Observe today is analyzing data to troubleshoot when an application is not working as it should. Last year, the company launched a generative AI tool that gives users guidance on what they can check out and what’s coming. This also inevitably leads to customers using the tool for more than just troubleshooting in areas like marketing and security.
“Security-related data or customer experience-related data can also be ingested,” Bruton said. “In fact, we don’t care what the data is. “It’s very permissive.” The company is currently working with third parties to improve that work, but is not ruling out native applications in these and other areas in the future.
As Snowflake continues to grow and acquire more and more data, it’s interesting that it chooses to invest in a partner developing its platform, rather than moving toward building (or acquiring) data observability tools to offer to customers directly.
For now, Stefan Williams, Snowflake’s vice president of corporate development who runs Snowflake Ventures, says it’s seeing big growth in its core database business for now, and a company like Observe is more attractive to help generate more activity in that front. together with others in the same space. In other words, you don’t want to compete with key business partners.
“We see it as a lever to unlock new clients,” he said in an interview. He appears to have chosen to invest in Observe as a tacit endorsement against other competitors in the space, ranging from giants like Splunk to other startups like access data. “ANDThere is software and data observability. [In data,] There is nothing that competes with Observe at the moment.”
The startup does not disclose its revenue, but says the ARR has increased. 171% and net income retention increased 174% compared to a year ago.