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Sendbird, a platform that makes it easier for businesses to add messaging, voice, and video chat functionality to their apps, has raised $100 million in a series C round of funding at a $1.05 billion valuation.
The raise comes while the so-called API economy is thriving as businesses across the spectrum have been forced to embrace digital transformation, be that through extending online customer service channels or expanding into video-based telehealth. The API economy was on an upward trajectory long before the global pandemic took hold, though, driven in part by a gradual shift from monolithic on-premises software to the cloud and microservices-based applications. Smaller, function-based components are easier to develop and maintain, with individual teams or developers taking responsibility for a single service — and APIs are integral to joining them all together.
Moreover, consumers and end-users increasingly expect to be able to engage with companies directly through their mobile apps. But a company that offers an app-based food delivery service, for example, doesn’t really want to consume resources building their own communications infrastructure to enable customers to chat with their driver — it’s much easier if they can leverage platforms that were custom-built for that purpose. This is where Sendbird comes into play.
“Even before Covid, there has been a shift to more and more of the tasks we accomplish in our lives occurring within mobile apps — online purchases, entertainment, food delivery, and lots of others,” Sendbird cofounder and CEO John S. Kim told VentureBeat. “Brands are increasingly choosing in-app chat over SMS as the way of connecting with users and connecting users with each other within the mobile and sometimes Web experience. These interactions facilitate purchases, provide support, and build loyalty. This is what’s been driving Sendbird’s growth for the last five years and continues to do so as the shift from offline to online continues.”
There has been a flurry of activity across the API sphere of late: MessageBird acquired Pusher to expand its real-time communication APIs; Idera, meanwhile, acquired Apilayer, a startup that provides cloud-based APIs to big names such as Amazon, Apple, and Facebook; and RapidAPI acquired Paw to help developers build, test, and manage APIs. And in the funding sphere, companies including MessageBird, Postman, and Kong have all raised large sums of money at multi-billion dollar valuations over the past year.
Founded out of Korea in 2013, Sendbird had largely focused on offering chat and messaging services to developers, but last March it expanded to offer real-time voice- and video-calling too. Although businesses can already choose from a wide array of free existing tools to connect with clients or customers, they don’t provide sufficient control over the experience, which is why many prefer to create custom solutions themselves in-house.
“Smaller companies typically rely on free services like Zoom or WhatsApp to connect with their customers,” Kim said. “But brands who want to control the branding and user experience, get the benefits of the data and analytics, and integrate conversations into a core workflow — such as connecting a seller with a buyer who has questions — those businesses are going to invest in a great mobile experience and that experience is going to need chat, voice, and video interactions as a core piece.”
Sendbird’s typical customer is a mobile-first digital company rather than traditional enterprise clients such as banks or insurance companies. For example, it counts several mobile wallets as customers, such as Indian super app Paytm. That said, Sendbird does have traditional enterprise clients too, including Korea Telecom and ServiceNow. “We do have traditional industries that did not start cloud first or mobile first as our customers, but going after those companies proactively is not a focus for us,” Kim said.
Prior to now, Y Combinator alum Sendbird had raised around $121 million in funding, the bulk of which arrived via its series B round of funding which closed in 2019. The company’s latest cash injection was spearheaded by Steadfast Capital Ventures, with participation from Emergence Capital, Softbank Vision Fund 2, World Innovation Lab, Iconiq Growth, Tiger Global Management, and Meritech Capital, and it said that it plans to use the funds to “aggressively accelerate its R&D efforts” and hire across its key hubs in San Mateo (California), New York, London, Munich, Singapore, Bengaluru, and Seoul.
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