Traversal Hits a $1 Billion Valuation With AI That Fixes Software Outages. Why New York Tech Teams Should Pay Attention

NEW YORK — For the last two years, most of the money and attention in AI software has gone to tools that write code faster. A New York startup just became a unicorn on the bet that the harder problem comes afterward: keeping all that code running.

Traversal, which builds AI agents for site reliability engineering, announced on Nov. 3 that it has raised $120 million at a $1 billion valuation. Kleiner Perkins, Redpoint Ventures and Khosla Ventures co-led the round, with participation from Sequoia Capital, Battery Ventures and Amex Ventures. The company says the deal brings its total funding to $173 million.

What Traversal Does

Site reliability engineering, or SRE, is the discipline of keeping production software available. When an app goes down at 2 a.m., an on-call engineer has to figure out which of hundreds of interconnected services, databases and recent code changes caused it. Traversal’s pitch is that an AI agent can run much of that investigation itself.

According to the company’s announcement, its product combines what it calls a Production World Model and a Causal Search Engine, which give the AI a continuously updated picture of a company’s systems, their dependencies and the likely root causes of an incident. The company says the tool helps engineering teams “autonomously diagnose, remediate, and prevent production incidents.”

Traversal lists Nubank, Harvey, PepsiCo and DigitalOcean among its customers. American Express is both a customer and, through Amex Ventures, an investor. In the announcement, Amex CTO Matthew Liste said the work “is helping us gain better insights into our production environment, giving engineering teams more context to identify and resolve issues.”

The Numbers Behind the Valuation

Traversal emerged from stealth in June 2025 with $48 million led by Sequoia and Kleiner Perkins, then took a strategic investment from Amex Ventures in December 2025. Since then, the company says:

• Annual recurring revenue has grown 9x year to date.
• Product usage is up nearly 100x and monthly active users nearly 20x over the same period.
• Customers ran more than 150,000 investigations last quarter, and the product supported more than 4,000 engineers across more than 1,000 major incidents.

Those are the company’s own figures, and Traversal did not disclose revenue in dollars. Tech Startups and Pulse 2.0 reported the same round details.

A Research Lab With New York Roots

Traversal’s founders trained as causal machine-learning researchers. According to the company, CEO Anish Agarwal and Raj Agrawal earned their PhDs at MIT, Raaz Dwivedi earned his at UC Berkeley, and Ahmed Lone came from quant trading at Citadel Securities. Agarwal and Dwivedi have kept faculty appointments at Columbia University and Cornell Tech while building the company.

That academic connection shows up in the company’s benchmark work. Traversal says it built ORCA-bench, a test of 1,079 root-cause tasks, with Cornell Tech and Columbia. On medium-difficulty incidents, the company reports, the best of five frontier AI agents it tested reached just 25.3% accuracy, falling to 10% when incident reports were vague, with hallucination rates as high as 40%. The company uses those results to argue that general-purpose models aren’t ready to run on-call duty on their own. As with any vendor-built benchmark, it’s worth reading as part of the pitch.

“Site reliability engineering is one of the hardest problems in applied AI because every company’s software environment is different,” Agarwal said in the announcement.

Why It Matters for New York Founders

The AI money is moving downstream. Coding assistants made it cheap to produce software. Investors are now paying up for the tools that operate, monitor and repair it. Traversal cites a 2026 Splunk and Oxford Economics report finding that downtime costs have risen 50% in two years, and a Gartner projection that 85% of enterprises will adopt AI SRE tooling by 2029, up from under 5% in 2025. If you’re building developer or infrastructure tools in New York, the “after the code ships” layer is where the checks are getting written.

Reliability isn’t just a big-company problem. A five-person startup or an agency running client websites doesn’t have an SRE team, but it does have outages, and a bad one can cost a customer. Enterprise tools like Traversal are priced for large engineering organizations, so for now the practical step for a small team is the basic one: know who is on call, keep a written runbook, and review what went wrong after every incident.

The city’s universities are part of the story. Two of Traversal’s co-founders hold faculty roles at Columbia and Cornell Tech, and the company built its benchmark with both schools. For founders recruiting technical talent, that kind of tie to local research programs is worth cultivating.

There’s hiring here. Traversal says it is hiring across research, engineering and go-to-market roles following the raise, with openings listed on its site.

The Bottom Line

A $1 billion valuation 15 months after leaving stealth is a strong signal that investors see production reliability as the next big AI market. For New York’s tech community, Traversal is both a new local unicorn and a reminder that the unglamorous work of keeping systems running is now one of the most valuable problems in software.