Enterprise software company Elastic has agreed to acquire Deductive AI, a startup specialising in AI-powered software reliability engineering, for up to $85 million, according to a person with knowledge of the deal. The acquisition marks a rapid exit for Deductive, which only emerged from stealth in November 2025 after raising a $7.5 million seed round led by CRV, with participation from Databricks Ventures, Thomvest Ventures, and PrimeSet at a valuation of $33 million.
Founded in 2023 by Rakesh Kothari, formerly VP of engineering at ThoughtSpot, and Sameer Agarwal, a founding engineer at Databricks and former Apache Software Foundation and Meta engineer, Deductive built AI agents designed to automatically detect and resolve software bugs, reducing incident resolution time and freeing human engineers to focus on product development rather than firefighting outages.
Elastic, best known for its Elasticsearch search and analytics engine, is expected to integrate Deductive’s technology into its observability platform, giving customers AI-driven tools to automatically monitor system performance and resolve failures in real time.
The deal reflects a broader pattern of established technology incumbents acquiring AI-native startups to embed agentic capabilities into existing product suites. The AI site reliability engineering sector has grown rapidly alongside the explosion of AI-generated code, which has increased demand for automated debugging at scale.
Deductive had reached approximately $1 million in annual recurring revenue at the time of the deal, trailing sector leader Resolve AI, which was co-founded by former Splunk executive Spiros Xanthos and last valued at $1.5 billion following a $40 million Series A extension in April.
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