By Aditya Soni

July 30 (Reuters) - Observe, whose tools help detect and

resolve issues in app systems, said it has raised $156 million

in a funding round led by private equity firm Sutter Hill

Ventures as demand rises for software that helps businesses

manage a growing deluge of data.

The San Mateo, California-based startup has pitched itself

as a one-stop alternative to data monitoring and analytics tools

from Datadog ( DDOG ) and Cisco-owned Splunk, aiming to simplify

how businesses detect failures in complex systems.

The Series C round was joined by existing investors Madrona

Ventures, Alumni Ventures as well as the venture capital arms of

cloud company Snowflake and U.S. bank Capital One, Observe said

on Wednesday, declining to share its valuation

Observe said it plans to use the funds to accelerate product

development and expand its North American presence, including

hiring more sales staff to grow its nearly 200-strong team.

It stores all customer data in a single, central "lake"

built on Snowflake and offers a lower-cost alternative to larger

rivals, a strategy that has helped it attract about 100 clients,

including Commonwealth Bank of Australia ( CBAUF ).

"We've deliberately, I'd say over the last 18 months, moved

our go-to-market away from the smaller organizations. So, we've

been focused on companies operating at scale," CEO Jeremy Burton

said in an interview. "Capital One is our biggest customer. But

Commonwealth Bank actually is very close."

Observe has tripled its revenue over the past year and has a

93% gross retention and 180% net revenue retention, the company

said, in signs of customer loyalty in a market where clients are

chasing lower costs.

The startup, which raised $115 million in a Series B round

last year, is using artificial intelligence to power an

assistant that helps users query data in plain English and

diagnose issues without writing complex code.