Observe Secures $115 Million in Series B Funding for Enhanced Application Observability
San Mateo-based startup Observe, which focuses on data-centric application observability, has successfully raised $115 million in a Series B funding round. The investment, led by Sutter Hill Ventures, also includes participation from existing investors and Snowflake Ventures, the venture capital branch of data powerhouse Snowflake.
The exact contribution from Snowflake remains undisclosed, although their involvement aligns with their ongoing collaboration with Observe. The startup leverages Snowflake’s data cloud as the foundation of its platform, and this new funding is set to enhance its observability capabilities within the data cloud, empowering users to monitor and manage their environments more effectively.
Industry Context and Unique Approach
In today's landscape, enterprise technology stacks are increasingly complex, with numerous applications running continuously and generating vast amounts of log, metric, and trace telemetry data. Typically, this data remains siloed, forcing teams to utilize multiple tools to correlate information and detect incidents like application downtimes. This challenge escalates for larger organizations with extensive application surfaces.
Founded in 2017 by industry veterans from Snowflake, Splunk, Wavefront, and Roblox, Observe addresses this issue by creating a centralized data lake designed to integrate all telemetry data into a cohesive "data graph." This innovation allows for easier analysis and more relevant context during incident resolution.
With the implementation of Snowflake’s data cloud, Observe has developed a unified observability solution, marking it as the first vendor in this space to utilize a modern data platform. The company has expanded its offerings to include generative AI-driven capabilities, enabling rapid troubleshooting of distributed applications at a lower cost.
“Centralizing the data allows Observe to establish relationships within the information, making it easier to pivot for additional context when investigating incidents, such as accessing logs for CPU spikes. This architecture not only speeds up troubleshooting but also reduces costs,” stated Jeremy Burton, CEO of Observe.
In FY2024, Observe reported a remarkable 171% increase in annual recurring revenue, a 194% surge in total contract value, and a net run rate growth of 174%. Leading enterprises, including Topgold, Reveal, F5, Linedata, Auditboard, and Edgio, rely on Observe's platform for efficient incident management.
Partnership with Snowflake
This funding will enable Snowflake to leverage Observe's advanced observability capabilities, enhancing monitoring of customer data cloud environments—including applications and pipelines—to detect incidents effectively.
“Observe aims to develop top-tier observability features that assist customers in effectively managing their Snowflake environments. Upcoming solutions, such as out-of-the-box dashboards and new visualizations, will empower developers and engineers to expedite their workflows and troubleshoot issues swiftly,” the company noted in a blog post.
Among the planned features is monitoring for Snowflake Native Applications created using Snowpark Container Services, making it easier and more cost-effective for customers to troubleshoot these applications. Burton highlighted that recent advancements, like ‘Snowpipe streaming,’ enable Observe to reduce data latency from minutes to seconds while cutting ingestion infrastructure costs by half.
In addition to enhancing capabilities, Observe plans to use this funding to expand its research and development and sales teams while broadening its presence in the North American market. Burton emphasized that Observe's centralized approach to telemetry data provides a competitive advantage that legacy monitoring providers like Splunk find difficult to replicate.
"The largest revenue generator in this space is Splunk, and as Cisco assimilates this acquisition, it presents a unique opportunity for Observe. Meanwhile, Datadog, with the most robust offering, is grappling with the limitations of its aging architecture, which is resulting in rising costs for customers. Additionally, New Relic and Sumo Logic have been recently acquired by private equity firms, likely leading to asset optimization strategies," he concluded.
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