DeductiveAI, a startup that uses artificial intelligence to find and fix bugs in software, has agreed to be sold to enterprise software company Elastic for up to $85 million, according to a person with knowledge of the deal.
Deductive, which was founded in 2023, went stealth 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 quick exit for Deductive, which operates in a fast-growing field known as AI site reliability engineering (AI SRE). Creating AI-powered SRE tools has become an important area due to the massive influx of AI-written code. Replacing manual debugging with AI allows human SREs to shift their focus from constantly fixing outages and other issues to spending more time helping product development.
The acquisition reflects a broader trend in which established tech companies are looking to buy AI startups to integrate agent technologies into their existing product suites, the source told TechCrunch.
Launched in 2018, Elastic is best known for Elasticsearch, the 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. According to the source, the integration of Deductive’s AI technology into Elastic will enhance the observability platform by providing customers with tools to automatically monitor performance and resolve system failures in real-time.
Deductive was founded by Rakesh Kothari, who was previously VP of engineering at Lightspeed-backed business analytics startup ThoughtSpot, and Sameer Agarwal, who previously worked at the Apache Software Foundation and Meta. Agrawal was one of the founding engineers at Databricks.
While Deductive has reached about $1 million in annual recurring revenue (ARR), according to the source, the startup’s growth has lagged behind Resolve AI, one of the industry’s early winners. Two-year-old Resolve was founded by former Splunk executive Spyros Xanthos and Mayank Agarwal. The Greylock and Lightspeed powered startup was last rated 1.5 billion dollars when it raised a $40 million Series A expansion in April.
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