Conversica raises $34m to scale its conversational AI

Conversational AI company Conversica, which has an annual recurring revenue of $18 million, has raised $34 million from a consortium of investors to increase its sales and marketing efforts and expand globally.
Written by Tas Bindi, Contributor

Conversational artificial intelligence company Conversica has raised $34 million in an oversubscribed Series B round led by Providence Strategic Growth Capital Partners. Toba Capital, Wellington Financial LP, and Recruit Strategic Partners contributed to the round, as did Series A investor Kennet Partners and Conversica founder Ben Brigham.

The funding will be used to boost the company's sales and marketing activities and for expansion into international markets. It will also support ongoing product development efforts including the launch of new AI assistants and multilingual support.

Conversica's flagship product, the AI Sales Assistant, automatically engages with prospective customers using natural, two-way email conversations until the lead converts into an opportunity or chooses to opt out. By qualifying leads, the sales assistant helps automate the front end of a company's sales funnel.

The difference between Conversica's AI-powered sale assistant and a regular email marketing automation application is similar to the difference between the telephone and the radio, the company's CEO Alex Terry said. One is used for personalised conversations, while the other is used for broadcasting information.

"Conversica will take into account all the variables it knows about [the recipient], all the context, and custom craft a message for them," Terry told ZDNet.

"If people don't reply after the first message, the assistant of course follows up. But where it gets really exciting is when that lead responds, the AI then kicks in and reads the message that comes back, figures out what the next thing to do is, and then does it by itself, without any human [intervention].

"It's a back and forth conversation between the AI and the lead until it reaches the point where it meets the criteria to be handed off to a human salesperson who can then close the deal. That criteria gets set by our customer."

The company has about 70 full conversation trees and 1,000 message templates, Terry said.

Conversica's AI assistants have sent and received 180 million messages from 24 million people, and implementation is touted as taking days.

"We think we have the largest training sets in the AI space for sales and marketing in the world," Terry said.

In addition, Terry said no programming skills are required on behalf of the companies to have an AI sales assistant up and running. Companies simply choose the assistant's name and title, and set up an email account for them to be used for all future customer communications.

The sales assistant automatically gathers leads from a range of customer relationship management and email marketing automation systems including Salesforce, Marketo, and HubSpot. At the moment, Conversica integrates with nearly 50 systems, with additional integrations to be included over time.

Terry, who joined the company in mid-2015, said the company dates back to 2007 when Conversica operated under a different name and was essentially a lead generation business for the automotive industry.

At one point, founder Ben Brigham noticed that a lot of the automotive dealers that were purchasing leads from him were asking for their money back. Upon further research, he realised this was happening because their sales teams weren't following up on the leads or just following up once.

"They would mark the lead as unresponsive and then the dealership would ask for their money back," Terry said. "Ben realised that the lack of thorough lead follow-up among sales teams was a problem that many dealerships face and that this problem was bigger than what his lead gen business was looking to solve."

Brigham then teamed up with artificial intelligence experts to build "Ava", an automated virtual assistant for automotive dealers.

However, in 2014, the company broadened its technology to support multiple verticals and multiple sales conversations, including B2B and B2C. It also changed its name from Ava.ai to Conversica, which the company thought was more reflective of what its technology had evolved into.

Today, the Foster City, California-based company generates $18 million in recurring revenue a year and has more than 16,000 users from 1,000 companies including IBM, Oracle, Hewlett Packard Enterprise, and Epson.

While Conversica's fastest growing vertical is technology, it also has traction in financial services, higher education, real estate, and hospitality.

Terry believes that although the conversational AI space is seemingly getting crowded, Conversica has an edge over its competitors.

"A lot of companies in the AI space had a smart data scientist who came up with a cool algorithm and now they're trying to find a business problem that needs solving," Terry said.

"Whereas we started off as a company solving a very specific business problem. We happened to use AI, machine learning, natural language processing, and other technologies to effectively solve that problem. As we scaled, we proved that our solution works in a variety of different industries.

"The reason we were able to raise one of the largest Series B rounds in the AI space this year is because we solve a real business problem and have real traction and real revenue."

When asked about the regularly spouted issue of humans losing their jobs to robots, Terry said that a vast majority of Conversica's customers have reported the need to hire additional salespeople to close deals due to the increased flow of qualified sales prospects sourced by the AI assistant.

"Sometimes they think that Conversica is going to replace some staff, but what they find is that the AI sales assistant handles more of the routine parts of the conversation, which then allows sales development or lead development reps to focus more on the value-added parts of those conversations," Terry said.

"Since they have a more efficient sales and marketing funnel, they're creating more sales meetings from a population of leads -- 20 to 30 percent more sales leads are created."

In the long haul, Terry said AI assistants will handle the menial, repetitive tasks, freeing people to focus on adding value elsewhere, a sentiment that has also been communicated by the founder and CEO of Australian conversational commerce company Flamingo.

Conversational AI company MindMeld launched its Deep-Domain Conversational AI platform in November, claiming it to be the next stage in the evolution of conversational AI. The platform makes it possible for companies to create voice and chat assistants that can demonstrate knowledge and expertise around any custom content domain.

Meanwhile, following a successful listing on the Australian Securities Exchange on November 17 with a market capitalisation of AU$23 million, Flamingo has decided to look at Australia as a key market, with online lending marketplace DirectMoney being announced as its first local client.

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