By Aditya Soni

March 27 (Reuters) - Observe, a startup whose software

helps detect and resolve issues in app systems, said on

Wednesday it had raised $115 million in a funding round that was

led by private equity firm Sutter Hill Ventures and also

included the venture capital arm of cloud firm Snowflake

.

The latest round of funding took the total amount raised to

$210 million. Existing investors Capital One Ventures and

Madrona also participated in the round.

Observe plans to use the funds to help expand its North

American presence.

The startup is trying to stand out in the market for tools

that identify failures in complex application systems with a

one-stop-shop solution that can replace the cloud monitoring and

analytics services offered by firms such as New Relic,

Datadog ( DDOG ), and Splunk, which was recently bought by Cisco ( CSCO )

for $28 billion.

The San Mateo, California-based startup's services are

cheaper than its bigger rivals, which has helped it secure about

100 clients including Capital One, Reveal and Top Golf.

"It is not good enough to just be cheaper. You have got to

be better as well. And so it is the combination of the two that

makes us interesting for the customer," said Observe CEO Jeremy

Burton, who sits on Snowflake's board and has held senior roles

at companies including Oracle and Dell Technologies.

Observe's annual recurring revenue nearly tripled in its

last fiscal year, and its net revenue retention - a measure of

its ability to retain and expand customers - was 174%.

While the seven-year-old company is yet to turn a profit and

is much smaller than its listed rivals, its strong growth

contrasts with the broader sales slowdown in the cloud industry

brought on by high interest rates and an uncertain economic

outlook.

Burton said Observe expects "to keep on more than doubling"

its annual recurring revenue this fiscal year.