Observe Raises $156 Million as Demand for AI-Powered Observability Grows

Observe has secured $156 million in Series C funding to expand its AI-powered observability platform. The round, led by Sutter Hill Ventures with participation from Madrona Ventures, Alumni Ventures, Snowflake Ventures, and Capital One Ventures, will support product development, AI innovation, and global hiring. The company’s growth reflects a wider enterprise shift toward platforms that unify and analyze telemetry data at scale without the high costs and complexity of legacy tools.

Over the past year, Observe has tripled revenue and doubled its enterprise customer base. Adoption has been driven by large enterprises, SaaS providers, and AI-native companies replacing platforms like Splunk and Datadog. The appeal lies in its architecture, which pairs a cost-effective data lake with a knowledge graph and AI-driven workflows, enabling faster troubleshooting and more efficient operations. The platform processed over 150 petabytes of telemetry data in the past year, with monthly active users tripling in the same period.

Observe’s approach addresses three major trends: moving telemetry data into scalable data lakes, reducing the bottleneck of connecting disparate data points, and using AI to accelerate root-cause diagnosis. Its offering combines the O11y Data Lake for real-time ingestion, the O11y Knowledge Graph for contextual mapping, and O11y AI SRE to enhance instrumentation and guide resolution. Together, these components help engineering, security, and infrastructure teams cut mean time to resolution and manage costs.

With fresh funding, Observe plans to scale its reach and capabilities as enterprises increasingly see observability as critical for system resilience, AI performance, and customer experience. By consolidating logs, metrics, and traces into a single AI-powered environment, the company is positioning itself as a core enabler for organizations navigating the complexity of distributed, data-heavy systems.