Tsuga Raises $35M Series A for AI Observability

Tsuga, a Paris-based startup founded by former Datadog engineers, has successfully closed a $35 million Series A funding round. The investment was led by Singular, with significant participation from General Catalyst, DST Global Partners, QuantumLight, Picus Capital, and Databricks Ventures. This substantial capital infusion underscores the growing demand for advanced observability solutions tailored to the complexities of modern, AI-driven infrastructure.

The company, which emerged from stealth mode in late 2025, is redefining the observability paradigm by focusing on AI-native resilience. Unlike traditional approaches that ingest and store vast amounts of telemetry data in third-party clouds, Tsuga deploys its platform directly within the client's cloud environment – be it AWS, Azure, Google Cloud, or sovereign clouds. This architecture ensures data privacy and significantly reduces the cost burden associated with escalating data volumes, a critical concern as AI agents and autonomous systems proliferate.

Gabriel-James Safar, co-founder and CEO of Tsuga, highlighted the limitations of legacy observability models. "The traditional model of ingesting, storing, and charging based on data volume is becoming unsustainable due to the exponential growth driven by AI loops and autonomous deployments," Safar stated. "Our conviction is that this model no longer makes sense." Tsuga's platform natively integrates AI agent traces, prompts, tokens, and call graphs alongside standard application telemetry, making this data directly actionable by AI for automated incident diagnosis.

This latest funding round follows an initial $10 million seed round raised in December 2025, also with the backing of General Catalyst. The rapid follow-on investment reflects strong early commercial traction and positive customer feedback since the company began generating revenue in early 2026. Tsuga reports several million dollars in annual recurring revenue, with an average contract value in the six figures, serving prominent clients such as Le Monde, Camunda, Buk, and Black Forest Labs.

The market for observability tools is projected to reach tens of billions of dollars globally in the coming years, driven by the increasing adoption of cloud-native architectures and the pervasive integration of AI across enterprise IT. However, the sheer volume and complexity of data generated by these systems present significant challenges for existing solutions. Tsuga's AI-native, data-sovereign approach positions it to capture a significant share of this expanding market, particularly among large enterprises grappling with escalating observability costs and reliability concerns.

With this new capital, Tsuga plans to accelerate product development, expand its engineering team, and bolster its sales and marketing efforts. The company, currently employing around 40 individuals, aims to grow its headcount to approximately 100 by early 2027. This strategic expansion is designed to solidify its market position and meet the escalating demand for intelligent, cost-effective observability solutions in the age of artificial intelligence.