‘It was just a fight that we decided to pick’: Serval raises $150 million at a $3 billion valuation to tackle ServiceNow

“It was just a fight that we decided to pick,” Stauch, the CEO and co-founder of Serval, told Fortune. The biggest guy is ServiceNow. Serval’s ads go after it by name, its sales pitch is built around replacing it, and even the company names sound similar. Stauch said that last part is a coincidence. “I really like the cat name.”

The fight now comes with a price tag. Serval has raised $150 million at a $3 billion valuation, its third round in 12 months, bringing its total funding to $277 million. Sequoia led the Series C, as it led the $75 million Series B in December that valued Serval at $1 billion. Elad Gil, Evantic, First Round, General Catalyst and Redpoint came back, and Conviction and Headline joined. Serval had about 20 employees in January this year, and are about 200 now. They’re scaling fast: Stauch expects at least 700 by the end of next year.

Disclosure: ServiceNow sponsors Fortune’s AIQ event.

The case for the cat

Stauch and co-founder Alex McLeod, Serval’s chief technology officer, met at the security-camera company Verkada. When they went looking for a company to build, they made a list of the biggest enterprise software companies ever and asked which ones AI could knock over. ServiceNow was “two or three on that list,” Stauch said.

Their bet is that ServiceNow, under all the branding, is a workflow automation company built on drag-and-drop tools and custom configuration, and that AI-written code makes all of that cheap. “If workflow automation is about to be disrupted,” Stauch said, “then actually what we’re building is not just a solution for these customers we’ve been talking to, but it’s actually a new generation of massive enterprise software company.”

He brushed off the idea that incumbents can just bolt AI on. “I would be very curious around the actual go-live adoption of those products,” he said.

One customer listed on Serval’s website is WPP, the European advertising conglomerate. Serval says two Fortune 20 companies converted in the last six months. “Those are two names we wish we could name and we cannot,” Stauch said. The company says annual recurring revenue has doubled every quarter since the Series B but won’t give dollar figures.

Stauch noted that ServiceNow was worth around $150 billion before this week’s earnings, down from a peak near $230 billion. Pitching investors on a company that might someday be that big is, he said, the whole game. “This delusional plan we had two years ago,” he said, “is actually starting to come to fruition.”

Sequoia is making the same bet, louder. “From the data we’ve seen, Serval is on a trajectory to be the fastest-growing top-down Enterprise system-of-record company in history,” Anas Biad, the Sequoia partner on the deal, told Fortune.

McLeod describes how it works. Serval builds automations in an agent called Catalyst, tests them in a separate environment with branching, access controls and audit logs, and then publishes them to a second agent that employees use. “It’s not just enough to give people a coding agent,” he said.

Biad dismissed the criticism that Serval has no IP of its own, compared to an incumbent like ServiceNow, with 20 years of experience advising IT departments. “Serval has exceptional IP in the platform and system of record it has built, which customers are adopting at an incredible pace,” he said. “Our consecutive investments in the company speak to that.”

Sequoia doubles down

Biad said the round values Serval at $3 billion post-money, a $150 million Series C. Asked whether Sequoia’s math depends on an eventual sale, he said: “Our mission at Sequoia is to help the daring build legendary companies, from idea to IPO and beyond,” he said. “We believe Serval has the potential to become one of the largest software platforms in history.”

Stauch described the back-to-back raises as “opportunistic.” Serval has “years and years of runway in the bank,” he said, with large companies deciding right now whether to stick with the vendors they have.

The big guy hits back

Sean Regan, general manager of Flow by ServiceNow, told Fortune the incumbent’s edge is the part a startup can’t copy. “Every AI agent needs trusted data, workflows, and governance to act on. That can’t be easily replicated,” he said in a statement.

“Anyone can build a great demo. Running mission-critical operations for a global enterprise, securely and with every AI action governed, is the hard part, and it’s what we do every day,” Regan said. “AI makes it easier to build a startup. It doesn’t make it easier to run workflows across an entire enterprise, millions of times, with the security and auditability customers require.”

ServiceNow’s answer is also a product. Flow, a standalone AI service desk launched Oct. 1, can be running in a day without an implementation project, and new customers will be able to buy it with a credit card, including companies with no ServiceNow contract. Flow’s published price is $2 per conversation. “It deploys in a day, and customers don’t have to give up the governance and operational depth only our platform provides,” Regan said.

Regan pointed to ServiceNow’s third-quarter results, released Wednesday: agentic AI consumption in production up more than 13 times year over year, a 98% renewal rate, AI ITSM deal volume up nearly 80% and a 2026 AI annual contract value target raised to $1.7 billion from $1.5 billion.

The stock, however, fell more than 17% in after-hours trading Wednesday and is down more than 26% in Thursday trading. Third-quarter revenue of $4.11 billion edged past estimates, but earnings of $1 a share missed the $1.02 analysts expected, and ServiceNow guided fourth-quarter revenue to $4.25 billion to $4.26 billion, short of the $4.36 billion consensus.

The kids in the middle

Serval is launching a services arm, ProServal, and plans to hire more than 100 “Automation Engineers” over the next year. About half will come straight out of college, get four weeks of training, and then be embedded inside customers to rebuild their workflows. Serval cited a Stanford Digital Economy Lab finding that employment for 22- to 25-year-olds in the most AI-exposed jobs has fallen 13% relative to older workers since late 2022.

Stauch’s argument goes back to the Jevons paradox, the 19th-century observation that more efficient steam engines made Britain burn more coal, not less, which many have pointed to as a comparable for the AI age. Nobody finishes 10 tasks faster and goes home early, Stauch said. “We instead say, well, now I want 100 things done instead of just the 10.”