A cluster of startups taking on database giants Snowflake, Databricks and Datadog are experiencing a revenue windfall thanks to rising adoption of AI agents. That could lead to a wave of startup dealmaking, from new investments to M&A. Earlier Tuesday, I reported that ClickHouse’s annual recurring revenue jumped 40% from May to $350 million, and that OpenAI’s use of the startup, which provides free open-source software and paid cloud services to help companies analyze large volumes of data, has jumped this year.
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A cluster of startups taking on database giants Snowflake, Databricks and Datadog are experiencing a revenue windfall thanks to rising adoption of AI agents. That could lead to a wave of startup dealmaking, from new investments to M&A.
Earlier Tuesday, I reported that ClickHouse’s annual recurring revenue jumped 40% from May to $350 million, and that OpenAI’s use of the startup, which provides free open-source software and paid cloud services to help companies analyze large volumes of data, has jumped this year.
OpenAI’s use is notable, since the ChatGPT maker has also been a customer of publicly traded Datadog, the giant in observability—or monitoring the actions humans and AI agents take on computers. ClickHouse last raised funding at a $15 billion valuation in January and fielded many approaches this year from strategic buyers, according to a person with direct knowledge of the discussions.
“We don’t dismiss interest because we have a responsibility to our shareholders but we are not selling the company, quite the contrary,” Chief Executive Aaron Katz told me.
ClickHouse isn’t alone in benefiting from the large data needs spurred by AI agents. Cribl, which sells technology known as telemetry that helps companies move and store data for monitoring, says its annual recurring revenue is near $400 million, up 33% from February.
“Our enterprise customers are experiencing a massive data growth driven in part by AI and the advent of agents and we’re helping them handle it,” said Cribl cofounder and CEO Clint Sharp.
The eight-year-old company says it helps customers including Zoom, ServiceNow and Hilton by routing them to cheaper storage and the most efficient monitoring tool.
“The problem we solve is that your data is growing at a 30% compound growth rate, and your budget isn't,” Sharp said.
Cribl, which last raised venture funding in August 2024 at a $3.5 billion valuation, is aiming for an initial public offering in the next couple of years, said Sharp.
And Grafana, a 12-year-old startup that sells tools that let developers visualize in real time how their applications, cloud servers and AI agents are behaving, says it’s recently seen a pickup in revenue. That’s in part thanks to the company’s AI assistant, which helps companies observe activity on their own apps, said Scott Fingerhut, Grafana’s chief marketing officer.
Fingerhut said half of Grafana’s customers this year used the assistant to get the company’s software to monitor their systems or configure tools.
The company, which was valued at $9.6 billion in March, passed $400 million in annual recurring revenue last September. It frequently comes up as a possible acquisition target for a larger company interested in data monitoring, say software bankers.
Elastic, Snowflake Purchases
Already, larger companies have been buying startups that specialize in monitoring data.
Elastic, a publicly traded company that provides an open-source search engine for large data sets, on Monday bought Deductive AI, which helps engineers monitor data to resolve issues, for $85 million. Two weeks ago, Dynatrace paid $915 million for Arize AI, whose AI tracks how models and agents behave.
Snowflake closed its $1 billion purchase of Observe in June, betting that customers already storing their data in its platform will want the tools to see how their applications are performing. The acquisition, first reported by The Information, followed cybersecurity company Palo Alto Networks’ purchase of observability startup Chronosphere for $3.35 billion.
Other acquisitions are likely, investors and bankers say. Cybersecurity firms, big tech companies such as Google, Amazon and Microsoft, and networking companies like Cisco could all make a play for startups that monitor data.
“As AI agents take on more autonomous work, companies need visibility into what they’re doing and safeguards to catch failures or security risks before they cause harm,” said Mike Jung, partner at Founders Circle Capital, which has backed Databricks, Vercel, ClickHouse and Cribl.
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