Source: Elastic has agreed to buy CRV-backed DeductiveAI for up to $85 million

DeductiveAI, a startup that uses artificial intelligence to detect and fix software bugs, has agreed to be sold to enterprise software company Elastic for up to $85 million, according to a person familiar with the deal.

Deductive, which was founded in 2023, made a stealth exit 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.

Resilience and Conclusion 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 sector known as artificial intelligence site reliability engineering (AI SRE). Building AI-powered SRE tools has become an important field, driven by the massive influx of code written by AI. Replacing manual debugging with AI enables human SREs to shift focus from constantly fixing outages and other issues, to spending more time helping with product development.

The acquisition reflects a broader trend in which established tech players are looking to buy AI startups to integrate agent 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 — can leverage Deductive’s technology. According to the source, integrating Deductive’s AI technology into Elastic will enhance its monitoring system by giving customers tools to automatically monitor performance and resolve system failures in real-time.

Deductive was co-founded by Rakesh Kothari, who was previously VP of Engineering at Lightspeed-backed business analytics startup ThinkSpot, and Sameer Agarwal, who previously worked at Apache Software Foundation and Meta. Agrawal was one of the founding engineers of Databricks.

While Deductive has reached nearly $1 million in annual recurring revenue (ARR), according to the source, the startup’s growth has lagged behind Resolve AI, one of the early winners in the sector. Two-year-old Resolve was founded by former Splunk CEO 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 extension in April.