DeductiveAI, a startup that uses AI to detect 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, founded in 2023, was discreet last November by announcing a $7.5 million seed round led by CRV with the participation of Databricks Ventures, Thomvest Ventures and PrimeSet. The investment values 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 rapid exit for Deductive, which operates in a rapidly growing sector known as AI site reliability engineering (AI SRE). Building AI-based SRE tools has become an important field, driven by the massive influx of AI-written code. Replacing manual debugging with AI allows human SREs to shift their focus from constantly fixing crashes and other issues to spending more time helping with product development.
The acquisition reflects a broader trend where incumbent tech players are looking to buy AI-native startups to integrate agentic technologies into their existing product suites, the source told TechCrunch.
Elastic, which went public in 2018, 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 its observability platform by providing customers with tools to automatically monitor performance and resolve system outages in real time.
Deductive was co-founded by Rakesh Kothari, who was previously VP of Engineering at ThoughtSpot, a Lightspeed-backed business analytics startup, and Sameer Agarwal, who previously worked at Apache Software Foundation and Meta. Agrawal was one of the founding engineers of Databricks.
While Deductive reached about $1 million in annual recurring revenue (ARR), according to the source, the startup’s growth lagged behind Resolve AI, one of the perceived early winners in the industry. Resolve, a two-year-old company, was co-founded by former Splunk executive 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 round in April.
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Marina Temkin is a venture capital and startups reporter at TechCrunch. Before joining TechCrunch, she wrote about venture capital for PitchBook and Venture Capital Journal. Earlier in her career, Marina was a financial analyst and earned her CFA designation.
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