Observe.ai raises $125M, adding Zoom as an investor, to supercharge the contact center market
Contact centers play a key part in how a company engages with customers, amounting to what is a $400 billion market globally. Today, a company that believes it can improve how agents work within them using AI is announcing a big round of funding.
Observe.ai — which provides natural language tools to track voice and text conversations, and to provide coaching for subsequent engagements and to use the data for compliance and other reporting requirements — has raised $125 million, funding that it will be using to continue building out its technology and to move into more markets.
Its aim, said Swapnil Jain, the CEO of Observe.ai, is to target the “dreadful experiences” that tend to be the norm when it comes to contact center engagements.
The company has a number of large multinationals among its customers — it does not disclose which, but Jain cited a few major telecoms companies by name in our conversation, without confirming if they were actual customers. Those it does disclose include Kin, Public Storage, 23andMe, Group 1 Automotive, Accolade and Pearson.
The company said in March that ARR was up 150%, with customer interactions analyzed by its AI up 3x, and a 426% increase in AI-powered agent evaluations, with a 201% increase in AI-powered agent coaching sessions. (It does not disclose hard revenue numbers, saying that it is a figure in the “healthy eight-figure range,” so take percentages with that grain of salt.)
The funding is a Series C and has some notable investors in it. SoftBank Vision Fund is leading the round, with videoconferencing giant Zoom also participating, alongside previous investors Menlo Ventures, Scale Venture Partners, Nexus Venture Partners and others. Observe.ai has now raised $213 million, and it is not disclosing valuation, but for some context, PitchBook notes that San Francisco-based Observe.ai was valued at $304 million in July 2020.
Zoom is a strategic investor in this round, but Jain declined to give details of what the two will be doing together, although he said that it was likely to be revealed in the next month or two. Recall that Zoom has had some big ambitions to crack into the contact center market for a while.
Zoom launched a new contact center solution in February 2022, although its attempt to acquire Five9, a big player in the space, for nearly $15 billion, fell through after the latter company’s shareholders rejected the offer. While there may still be some debate over whether customers, or indeed agents or businesses, want a lot of video engagement in calls, there are times when you might imagine that could be useful, such as in cases of technical support.
Observe.ai could bring into that mix a sweetener for would-be customers, in the form of intelligence that can be applied to voice-only interactions and those taking place over chat. But sounds like it might be moving into measuring sentiment and conversations over Zoom’s most famous medium, too:
“This will be a first for us, working with video analytics,” Jain said, although it’s too early to say what value we will get from analyzing all that.”
The contact center market is one of the noisiest when it comes to enterprise software and its adoption of AI. Anecdotally, I am not sure that TechCrunch covered a single contact center startup in the last several years that hasn’t leaned on talking about AI innovation to disrupt how it all works. (Gong.ai, Google, Talkdesk and more are among those playing in this space.)
Observe.ai was incubated at Y Combinator (part of its Winter 2018 cohort) and has been around since 2017, and it believes it has been one of the leaders in this movement, not least in part because of team members like Jithendra Vepa, its chief machine learning scientist, who previously led the team at Samsung working on its AI assistant Bixby. “We are focused on AI accuracy,” said Jain, who co-founded the startup with Akash Singh (CTO) and Sharath Keshava (CRO).
One critical point in the approach that Observe.ai takes is that it sees itself as an augmentation, not replacement, for actual agents, a distinction that is shaping up to be a key point of differentiation between different AI approaches.
“There are going to be significant workflows when we speak about contact enters. We know there will be support but more than 40% of customers are using contact centers for sales processes now, too. When you are a buyer getting insurance, you want to get a human and trust.”
Part of the rationale for this large funding round is also to give the company some runway in the lead-up to what it is describing as “IPO readiness” although there is no timescale for how and when that might take place.
In the meantime, large backers are turning up for what appears to be a large opportunity today.
“Observe.AI has a transformative vision to deliver actionable and trustworthy AI that empowers digital-first businesses to create exceptional customer experiences”, said Priya Saiprasad, a partner at SoftBank Investment Advisers, in a statement. “The company has built an intelligent, flexible platform with endless use cases, from healthcare companies seeking to enhance patient experience through to financial institutions aiming to boost revenue. We are thrilled to partner with Swapnil and the team to help them accelerate a paradigm shift within the contact center industry.”