ServiceNow has acquired Traceloop, an Israeli startup that builds tools for monitoring and evaluating applications built on large language models. Traceloop co-founder and chief executive Nir Gazit announced the deal in a blog post on March 2, 2026.
Terms were not disclosed. Israeli business daily Calcalist estimated the value of the deal at $60-80 million.
Traceloop's technology will become part of ServiceNow's AI Control Tower, the company's product for managing and governing AI systems across an organisation. Gazit said OpenLLMetry, the open-source framework at the centre of Traceloop's business, will remain open source.
What Traceloop built
Gazit and Gal Kleinman, Traceloop's chief technology officer, founded the company about two and a half years before the sale. Gazit was previously chief architect at Fiverr and earlier led machine learning engineering teams at Google; Kleinman managed a data development group at Fiverr, Calcalist reported.
The pair first released OpenLLMetry, an open-source observability framework for LLM applications built on the OpenTelemetry standard. Developers add it to their code to record what their AI applications are doing in production. Gazit wrote that IBM, Microsoft and dozens of other organisations adopted it, and that some competitors built products on top of it.
On top of the framework, Traceloop built a commercial platform that traces every LLM call in production, runs quality checks such as faithfulness and relevance on live traffic, and lets teams train custom evaluators on their own data. It also detects drift in model quality and lets teams compare models and prompts using data. Calcalist reported that its customers included IBM, HiBob, Miro and Dynatrace.
“We're joining a team that shares our belief that AI observability isn't optional. It's foundational.”
Why ServiceNow is buying
Gazit wrote that talks with ServiceNow began around OpenLLMetry, which ServiceNow wanted to bring into the enterprise. As the discussions moved to AI Control Tower, he said, it became clear that the product needed deeper observability and evaluation: the ability to see not only what AI systems are doing but how well they are doing it, in real time, across models, agents and workflows.
"We're joining a team that shares our belief that AI observability isn't optional. It's foundational," Gazit wrote. He said that as companies deploy more AI agents and models, the need for visibility and governance grows, and that ServiceNow would give Traceloop the platform, reach and resources to build that layer.
Calcalist reported that the deal was ServiceNow's third Israeli acquisition in under three months, after its $7.75 billion purchase of Armis Security and its acquisition of Pyramid Analytics for an undisclosed sum.
What happens to customers
Gazit wrote that Traceloop will honour its obligations to existing customers and continue to sell the Traceloop product. Any changes to the product roadmap will be communicated in advance, and customers will be contacted individually.
He also said the team plans to keep contributing to the OpenTelemetry ecosystem.
Calcalist noted that companies often find serious model errors only after users run into them, and that when an AI agent invents data or takes the wrong action, users frequently leave a service without reporting the problem. Traceloop's monitoring and testing layer was designed to catch such failures before they reach end users.
The founders and the funding
Traceloop went through Y Combinator and in 2025 raised a $6.1 million seed round led by Sorenson Capital and Ibex Investors, according to the Israeli law firm Herzog Fox & Neeman, which advised on the financing. Calcalist reported that Samsung NEXT, Y Combinator and Grand Ventures also invested, and put the company's total funding at $6.1 million.
"ServiceNow acquiring Traceloop is a textbook example of a platform giant seeing an inflection point before the rest of the market," said Aaron Rinberg, a partner at Ibex Investors. He told Calcalist that the deal had been in the works for some time and was unrelated to geopolitical events; it was announced during the war with Iran.
In his post, Gazit described Traceloop as a small team from Israel. Neither company disclosed its headcount.
