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Enterprises today store and use data across an ever-growing number of applications and locations — making it challenging — if not impossible — to manage and query that data in a holistic way. That spells opportunity for startups building tools to stitch together that fragmentation, and today one of them — Observe — is announcing $112 million in funding on the heels of strong demand for its tech. The Series B values the startup at between $400 million and $500 million, sources tell TechCrunch. (Observe would not comment on the figure.)

Observe — not to be confused with Observe.AI — builds observability tools for machine-generated data that aims to break down data silos, and it was built from the ground up tightly integrated with the data-as-a-service giant Snowflake. Now, this strategic partner is becoming a strategic investor: Snowflake has joined the round alongside Series B lead Sutter Hill Ventures and other participants and previous backers Capital One Ventures and Madrona.

The round is all equity, but part of it includes a conversion of previous debt that the company had raised (we covered one $50 million debt raise in October 2023). CEO Jeremy Burton said in an interview that the plan is to covert the remaining debt in an upcoming Series C.

This latest round speaks to a few significant currents in the market at the moment.

The first of these is the fact that enterprises are very much under pressure to look for more cost-effective solutions for running their technology.

A push to pay more efficiently for services that get used has been driving the growth of software-as-a-service at the application layer, and now the growth of platforms like Observe — and Snowflake, and AWS, and others — points to how pervasive that model is also at the data layer, too. (The company charges primarily around queries rather than data ingestion, meaning companies pay for what they use.)

Ingesting silos of semi-structured data into a unified “lake” as Observe does also helps cut down the time and effort — and thus cost — needed to query that data.

The second is that enterprises are looking to get more mileage out of their data. The main use case for Observe today is to analyze data to troubleshoot when an application is not working as it should be. Last year the company launched a generative AI tool that gives users nudges on what it can query for, and what’s coming up. That is inevitably also leading to customers using the tool for more than just troubleshooting into areas like marketing and security.

“You can also ingest security-related data or customer experience-related data,” Bruton said. “In fact, we don’t care what the data is. It’s very permissive.” The company today works with third-parties to enhance that work but he doesn’t rule out native applications in these and other areas down the line.

As Snowflake continues to grow and take on ever more data, it’s interesting that it’s choosing to invest in a partner building on its platform, rather than make a move into building (or acquiring) data observability tools to offer customers directly.

For now, Stefan Williams, Snowflake’s VP of corporate development who runs Snowflake Ventures, says that for now its seeing plenty of growth in its core database business, and a company like Observe is more attractive for helping generate more activity on that front for it, alongside others in the same space. In other words, it doesn’t want to compete against key business partners.

“We see it as a lever to unlock new customers,” he said in an interview. It seems to have opted to invest in Observe as a tacit endorsement against other competitors in the space, which range from giants like Splunk through to other startups like Acceldata. “There is software and data observability. [In data,] there is nothing that competes with Observe right now.”

The startup is not disclosing revenues but says that ARR is up 171% and net revenue retention is up 174% compared to a year ago.