DeductiveAI, a startup that uses AI to find and fix software bugs, has agreed to be sold to enterprise software company Elastic for up to $85 million, according to people familiar with the deal.
Founded in 2023, Deductive emerged quietly last November when it announced a $7.5 million seed round led by CRV with participation from Databricks Ventures, Thomvest Ventures, and PrimeSet. The investment valued the startup at $33 million, according to PitchBook.
Elastic and Deductive did not respond to multiple requests for comment. TechCrunch will update this article if either company responds.
The sale marks a swift exit for Deductive, which operates in a fast-growing field known as AI site reliability engineering (AI SRE). Building AI-powered SRE tools has become an important area due to the massive influx of AI-written code. By replacing manual debugging with AI, human SREs can shift their focus from constantly fixing outages and other issues to spending more time supporting product development.
The acquisition reflects a broader trend of established technology industry incumbents looking to acquire AI-native startups to integrate agent technology into their existing product suites, people told TechCrunch.
Elastic, which went public in 2018, is best known for Elasticsearch, a search and analytics engine that helps organizations store, search, analyze, and monitor large amounts of data in near real-time.
The company’s observability software, essentially tools that allow engineers to monitor software systems and detect security threats, could benefit from Deductive’s technology. Integrating Deductive’s AI technology into Elastic will power its observability platform by giving customers the tools to automatically monitor performance and resolve system failures in real-time, according to officials.
Deductive was co-founded by Rakesh Kothari, former VP of Engineering at Lightspeed-backed business analytics startup ThoughtSpot, and Sameer Agarwal, who previously worked at Apache Software Foundation and Meta. Agrawal was one of Databricks’ founding engineers.
Deductive’s annual recurring revenue (ARR) has reached about $1 million, according to people familiar with the matter, but the startup’s growth has lagged behind Resolve AI, which has been recognized as an early winner in the space. Two-year-old Resolve was co-founded by former Splunk executives Spiros Xanthos and Mayank Agarwal. The Greylock and Lightspeed-backed startup was last valued at $1.5 billion when it raised a $40 million Series A extension in April.
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