Elastic has reportedly agreed to acquire Deductive AI, a startup that uses artificial intelligence to identify and resolve software failures, for as much as $85 million. The proposed transaction would give Elastic additional automation capabilities for its observability platform.
A person familiar with the agreement disclosed the deal and its potential value. Neither Elastic nor Deductive AI has publicly confirmed the acquisition or provided details about its expected closing date.
Deductive AI Reached an Exit Within Three Years
Founded in 2023, Deductive AI develops AI agents that analyse software code and operational data to determine why systems have failed. Its technology is designed to help engineering teams identify root causes and propose solutions without relying entirely on manual investigation.
The startup publicly launched in November 2025 with a $7.5 million seed round led by CRV. Databricks Ventures, Thomvest Ventures, and PrimeSet also participated in the financing.
PitchBook valued the company at approximately $33 million following the round. The reported sale price would therefore represent a substantial increase from that valuation less than a year after the funding announcement.
Deductive AI was co-founded by Rakesh Kothari and Sameer Agarwal. Kothari previously served as vice president of engineering at ThoughtSpot, while Agarwal worked at Meta and was among the founding engineers at Databricks.
The startup had reached approximately $1 million in annual recurring revenue, according to the person familiar with the transaction.
Technology Could Strengthen Elastic Observability
Elastic is best known for Elasticsearch, a search and analytics engine used to store, analyse, and monitor large volumes of data. Its observability platform helps engineering teams track application performance, investigate failures, and monitor infrastructure.
Integrating Deductive AI could allow Elastic customers to move beyond detecting incidents toward automatically diagnosing and resolving them. The technology analyses code, logs, metrics, and other system information to determine what caused a problem.
Interest in AI-powered site reliability engineering has increased as developers produce more software with AI coding tools. Automated debugging systems could allow site reliability engineers to spend less time investigating outages and more time improving products and infrastructure.
Resolve AI Emerges as a Major Competitor
Deductive AI competed with companies including Resolve AI, which develops agents for operating and repairing production software. Resolve AI raised a $40 million Series A extension in April at a $1.5 billion valuation.
The financing followed a $125 million Series A announced in February. Resolve AI was founded by former Splunk executives Spiros Xanthos and Mayank Agarwal and is backed by investors including Lightspeed Venture Partners and Greylock.
Featured image credits: Magnific.com
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