Enterprise software company Elastic has agreed to acquire DeductiveAI, a startup that uses AI to catch and resolve software bugs, for up to $85 million, according to a source with knowledge of the deal.
Founded in 2023, DeductiveAI came out of stealth last November with 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.
The sale marks a speedy exit for DeductiveAI, which operates in the fast-growing AI site reliability engineering (AI SRE) sector. The company’s tools replace manual debugging with AI, enabling human SREs to shift focus from constant firefighting to product development. The sector has gained momentum as the massive influx of AI-written code creates new challenges for software reliability.
For Elastic, best known for its Elasticsearch search and analytics engine, the acquisition brings AI-powered capabilities into its observability platform. Integrating DeductiveAI’s technology will give Elastic customers tools to automatically monitor performance and resolve system failures in real-time.
The acquisition reflects a broader trend of established tech incumbents buying AI-native startups to integrate agentic technologies into their product suites. DeductiveAI was co-founded by Rakesh Kothari, previously VP of engineering at ThoughtSpot, and Sameer Agarwal, a former Databricks founding engineer.
While DeductiveAI reached roughly $1 million in annual recurring revenue, its growth lagged behind sector leader Resolve AI, which was last valued at $1.5 billion.
Source: TechCrunch
