Observo AI Raises $15M for Agentic AI-Powered Data Pipelines

AI models require vast amounts of training data, and once deployed, these models fuel an ever-growing wave of operational telemetry including logs, metrics, traces, and more. This overload has pushed traditional observability and security systems to their limits.

According to Nancy Wang, Product Builder at Mercor and Former GM at AWS Data Protection, “For years, one challenge has come up again and again in conversations with CISOs from startups and Fortune 500s alike: observability and log data have become a top 5 cost driver. Security and engineering teams are feeling the pressure not just from soaring storage costs, but also from pipeline complexity and alert fatigue, making it harder to extract critical insights.”

Observo AI, a California-based AI startup aims to overcome this challenge by using AI-native data pipelines that can automatically manage telemetry data flows. The startup has raised $15 million in a seed funding round led by Lightspeed Venture Partners and Felecis.

The Observo AI platform has helped its customers, such as Bill.com and Informatica, reduce response times by over 40% and cut observability costs by 50%. The new funding will help the startup advance its goal of optimizing data pipelines so businesses can process AI-generated data faster, more securely, and at a lower cost.

The funding comes at a time when Observo AI is generating significant interest from businesses looking to process petabytes of data every day. The startup has achieved a staggering 600% revenue growth quarter-over-quarter since launching in April 2024.

A challenge with unstructured data for response systems is that if all that information is fed into the system, the costs and false positives increase. On the other hand, if data is filtered, it can undermine the accuracy and scalability of the system. Optimizing the data pipelines with the help of AI can help address this gap.

Observo AI claims that by leveraging machine learning (ML) and large language models (LLMs), they have created a platform that is 5-6x more efficient than legacy tools. Instead of relying on rigid, rule-based methods, Observo AI uses AI to dynamically filter, route, and adapt noisy and unstructured data in real time.

“Observo uses LLMs and Agentic AI to revolutionize observability and security,” said Gurjeet Arora, co-founder and CEO. “Our platform automates routine tasks, highlights key insights, and lets teams focus on preventing breaches and ensuring reliability.”

By harnessing agentic AI and streaming observability, Observo AI’s platform transforms data pipelines into adaptive and self-improving systems. The startup claims that the platform can automatically optimize data pipelines in real-time as new threats and anomalies emerge.

Recognizing the impact of the agentic AI capabilities, Guru Chahal, Partner at Lightspeed Venture Partners, added “Observo AI’s use of Agentic AI with streaming observability creates a powerful system that constantly learns and improves, making data pipelines efficient and intelligent. This is game-changing technology for enterprises grappling with the data challenges of observability and security infra.”

Observo AI founders, Gurjeet Arora and Ricky Arora, knew the challenges of observability and security firsthand. During their time at Rubrik, they noticed that observability tools don’t evolve or adapt quickly enough in response to the surging data volumes in the AI era. Not only was this inefficiency costly, but also unsustainable. They used their deep product and engineering expertise to create an AI-native architecture that fundamentally reimagines observability pipeline optimization.

(AI-generated/Shutterstock)

AI-powered data observability is not new, however, the arrival of more sophisticated agentic AI tools has added an autonomous dimension to the tools. Arora asserts that agentic AI sets Observo apart from its competitors, such as Cribl, Splunk, and DataDog.

However, with the rising popularity of agentic AI systems, it’s likely that competitors already have or will soon integrate similar capabilities into their platforms. As the market evolves, the race will not just be about adopting AI, but about how effectively it is applied to optimize data pipelines.

Integrating observability for data and AI will be crucial for businesses to fully benefit from AI. With the fresh capital from the seed round, Observo AI plans to enhance its product with more AI capabilities and use the funds to accelerate its go-to-market efforts.

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