Elastic to acquire DeductiveAI for up to $85M to integrate AI-powered observability tools

Elastic, the enterprise software company known for its Elasticsearch platform, announced it will acquire DeductiveAI, an AI startup focused on detecting and resolving software bugs, for up to $85 million. The agreement was confirmed by a person with knowledge of the deal. DeductiveAI was founded in 2023 and emerged from stealth in November 2024 with a $7.5 million seed round led by CRV, alongside participation from Databricks Ventures, Thomvest Ventures, and PrimeSet. The investment valued DeductiveAI at $33 million at the time, according to PitchBook. DeductiveAI’s technology targets AI site reliability engineering (AI SRE), an area gaining traction due to the proliferation of AI-written code. The startup’s tools aim to automate debugging and monitoring, enabling human engineers to focus on product development rather than constant firefighting. Elastic, which went public in 2018, specializes in search and analytics, and its observability software monitors software systems and detects security threats. The company plans to integrate DeductiveAI’s AI capabilities into its observability platform to enhance real-time performance monitoring and automated issue resolution. DeductiveAI was co-founded by Rakesh Kothari, former VP of engineering at ThoughtSpot, and Sameer Agarwal, who previously worked at the Apache Software Foundation, Meta, and as a founding engineer at Databricks. As of the time of the report, DeductiveAI had reached roughly $1 million in annual recurring revenue (ARR), though its growth trailed behind Resolve AI, another AI SRE startup valued at $1.5 billion following a $40 million Series A extension in April 2025.