March 27 (Reuters) - Observe, a startup whose software helps detect and resolve issues in app systems, said on Wednesday it had raised $115 million in a funding round that was led by private equity firm Sutter Hill Ventures and also included the venture capital arm of cloud firm Snowflake .

The latest round of funding took the total amount raised to $210 million. Existing investors Capital One Ventures and Madrona also participated in the round.

Observe plans to use the funds to help expand its North American presence.

The startup is trying to stand out in the market for tools that identify failures in complex application systems with a one-stop-shop solution that can replace the cloud monitoring and analytics services offered by firms such as New Relic, Datadog, and Splunk, which was recently bought by Cisco for $28 billion.

The San Mateo, California-based startup's services are cheaper than its bigger rivals, which has helped it secure about 100 clients including Capital One, Reveal and Top Golf.

"It is not good enough to just be cheaper. You have got to be better as well. And so it is the combination of the two that makes us interesting for the customer," said Observe CEO Jeremy Burton, who sits on Snowflake's board and has held senior roles at companies including Oracle and Dell Technologies.

Observe's annual recurring revenue nearly tripled in its last fiscal year, and its net revenue retention - a measure of its ability to retain and expand customers - was 174%.

While the seven-year-old company is yet to turn a profit and is much smaller than its listed rivals, its strong growth contrasts with the broader sales slowdown in the cloud industry brought on by high interest rates and an uncertain economic outlook.

Burton said Observe expects "to keep on more than doubling" its annual recurring revenue this fiscal year. (Reporting by Aditya Soni in Bengaluru; Editing by Tasim Zahid)