ServiceNow buys Traceloop in $60-$80 million deal, its third Israeli acquisition in under three months
The deal follows ServiceNow’s recent Israeli acquisitions of Armis Security and Pyramid Analytics.
Amid the war with Iran, ServiceNow is moving ahead with another acquisition in Israel, purchasing the Israeli startup Traceloop, according to a blog post published by the company’s CEO. The terms of the deal were not disclosed, but its value is estimated at $60-$80 million.
Traceloop has raised $6.1 million to date from investors including Sorenson Capital, Ibex Investors, Samsung NEXT, Y Combinator and Grand Ventures. At the time of the acquisition, the company was serving customers such as IBM, HiBob, Miro and Dynatrace.
The deal marks ServiceNow’s third acquisition in recent months, following its $7.75 billion purchase of Armis Security and its acquisition of Pyramid Analytics for an undisclosed sum.
Traceloop was founded two-and-a-half years ago by CEO Nir Gazit and CTO Gal Kleinman. Gazit previously served as chief architect at Fiverr and earlier led machine learning engineering teams at Google. Kleinman also came from Fiverr, where he managed a data development group and held senior engineering roles. The company is an alumnus of the Y Combinator startup accelerator.
Traceloop’s solution is built on top of its open-source technology, OpenLLMetry. The platform replaces manual trial-and-error testing with automated evaluations of agent performance, enabling developers to detect problems early, track real-world behavior, and deploy fixes with greater confidence.
“We're joining a team that shares our belief that AI observability isn't optional. It's foundational,” Gazit wrote in a blog post. “As enterprises deploy more AI agents, more models, and more complex workflows, the need for visibility and governance only grows. Inside ServiceNow, we'll have the platform, the reach, and the resources to build the observability and evaluation layer that enterprise AI demands. Together, the combination of Traceloop and ServiceNow AI Control Tower will power deeper observability to drive intelligent governance workflows.”
The acquisition comes as artificial intelligence systems grow more complex, and harder to monitor. While companies such as OpenAI, Anthropic and Google continue releasing new protocols and developer tools, including MCP and Agent2Agent, many developers say existing performance metrics fail to reflect real-world behavior.
Industry data indicates that companies often discover critical model errors only after users encounter them. Unlike traditional software, when an AI agent hallucinates data or performs an incorrect action, users frequently do not report the issue, they simply abandon the service.
Until now, improving AI performance has often relied on labor-intensive trial and error, primarily through prompt adjustments, without the rigorous engineering controls and monitoring tools common in conventional software development. This lack of transparency can make complex AI systems unpredictable once deployed in production.
Traceloop has developed a monitoring and testing layer designed specifically for products built on large language models. Its system gives developers visibility into how models behave in real-world scenarios, enabling performance evaluation under realistic conditions rather than abstract benchmarks.
In effect, Traceloop aims to provide developers with an early-warning system, identifying failures before they reach end users, reducing churn and helping stabilize AI-powered applications at scale.
"ServiceNow acquiring Traceloop is a textbook example of a platform giant seeing an inflection point before the rest of the market," said Aaron Rinberg, Partner at Ibex Investors. "This has been bubbling for a little while now, nothing to do with the other geopolitical headlines. Traceloop reinvented how teams observe and validate AI driven systems. Plugging this into ServiceNow’s enterprise footprint is going to reshape what ‘reliability’ means at scale."
