Berkeley-headquartered AI observability and LLM evaluation company Arize AI has raised $70 million in a Series C funding round led by Adams Street Partners. The largest-ever investment in AI observability saw participation from M12 (Microsoft's venture fund), Sinewave Ventures, OMERS Ventures, Datadog, PagerDuty, Industry Ventures, and Archerman Capital, alongside existing backers such as Foundation Capital, Battery Ventures, TCV, and Swift Ventures.
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Importance of AI Observability
"AI adoption is skyrocketing," the company said, noting that business spending surpassed USD 13.8 billion in 2024, with 68 percent of enterprises planning to invest between USD 50 million and USD 250 million in generative AI in 2025. While AI models are more powerful, LLMs struggle to perform reliably in real-world applications like voice assistants, the company said.
Key Findings from Arize’s OpenEvals Research
According to the official release, Arize's OpenEvals research highlights a major blind spot: "LLMs struggle to reliably assess correctness of synthetic datasets compared to non-synthetic data—a major blind spot as enterprises rush to scale generative AI."
Arize states that these findings highlight serious risks in AI model training and self-improvement loops, where unchecked errors in synthetic data can compound over time.
With Arize's AI observability and LLM evaluation platform, the company says teams can test, troubleshoot, and course-correct AI systems before failures escalate into real-world consequences. This is particularly important as enterprises race to implement semi-autonomous multi-agent systems, voice assistants, and increasingly sophisticated consumer-facing AI applications, the AI startup noted.
"Building AI is easy. Making it work in the real world is the hard part," said Jason Lopatecki, CEO and Co-Founder of Arize AI. "Enterprises can't afford to deploy unreliable AI. Engineering teams need better infrastructure to test, evaluate, and troubleshoot their models before they impact customers. That's exactly what Arize delivers—whether through our enterprise platform, Arize AX, or our open-source offering, Arize Phoenix."
"As AI research and real-world applications accelerate, Arize will continue to pioneer new tools, like our recent first-to-market launch of audio evaluation for voice assistants, to help engineers working on these systems better evaluation, debug, and improve what they build," added Aparna Dhinakaran, Chief Product Officer and Co-Founder of Arize.
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Since its 2020 launch, Arize said it has become an AI observability provider for enterprises and government agencies—including Booking.com, Conde Nast, Duolingo, Hyatt, PepsiCo, Priceline, TripAdvisor, Uber, and Wayfair, among hundreds more. Its open-source tool, Arize Phoenix, now sees over two million monthly downloads.
Expanding Microsoft Partnership
Arize said its partnership with Microsoft is also expanding, with M12's investment reinforcing a long-standing collaboration. The company recently launched deeper integrations with Azure AI Studio and the Azure AI Foundry portal, SDK, and CLI, so AI engineers can easily integrate observability and evaluation into their workflows.
Leaders Endorse Arize's AI Platform
"We believe AI observability is the missing piece in making AI truly enterprise-ready," said Fred Wang, Partner at Adams Street Partners. "As AI adoption accelerates, companies need robust, cohesive tools to ensure their AI systems are performant, reliable, and aligned with business goals. Through our research and diligence in this market, we believe Arize AI has built the category-defining platform for AI observability and evaluation, trusted by leading enterprises and AI-first organizations."
"Arize AI's innovative approach to AI observability and LLM evaluation is transforming the way enterprises deploy and manage AI systems. Our investment reflects our confidence in their ability to set new standards in the industry and empower AI engineers and developers to achieve real-world results," said Todd Graham, Managing Partner at M12.
"Tripadvisor's billion-plus reviews and contributions are becoming even more important in a world of AI search and recommendations where travel experiences are more conversational, personal and even agentic. As we build out new AI products and capabilities, having the right infrastructure in place to evaluate and observe AI is important. Arize has been a valuable partner on that front," said Rahul Todkar, Head of Data and AI at Tripadvisor.
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"With GenAI, we're facilitating more tailored experiences that adapt and respond to travellers' needs faster than ever before. As we continue to innovate, our technical teams blend an approach of pioneering new tools in-house and using platforms like Arize to help in testing, evaluating and tracing new AI-powered applications and workflows," said Jeroen Hofman, ML Engineering Manager at Booking.
"Arize AI deserves a lot of credit for pioneering AI observability and creating a de facto standard for enterprises that want to achieve real-world results with generative AI," said Brett Wilson, General Partner at Swift Ventures. "We're proud to continue to back the company as it scales."
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About Arize AI
According to the official release, Arize AI is a unified AI observability and LLM evaluation platform that helps teams develop and maintain more successful AI. Arize's automated monitoring and observability platform enables teams to quickly detect issues as they arise, troubleshoot their causes, and enhance overall performance across both traditional ML and generative AI applications.
