Sendbird raises $100M at a $1B+ valuation, says 150M+ users now interact using its chat and video APIs

Messaging is the medium these days, and today a startup that has built an API to help others build text and video interactivity into their services is announcing a big round to continue scaling its business. Sendbird, a popular provider of chat, video and other interactive services to the likes of Reddit, Hinge, Paytm, Delivery Hero and hundreds of others by way of a few lines of code, has closed a round of $100 million, money that it plans to use to continue expanding the functionalities of its platform to meet our changing interactive times. Sendbird has confirmed that the funding values the company at $1.05 billion.

Today, customers collectively channel some 150 million users through Sendbird’s APIs to chat with each other and large groups of users over text and video, a figure that has seen a lot of growth in particular in the last year, where people were spending so much more time in front of screens as their primary interface to communicate with the world.

Sendbird already provides some services around that core functionality such as moderation and text search. John Kim, Sendbird’s CEO and founder, said that additional developments like moderation has seen a huge take-up, and services it plans to add into the mix include payments and logistics features, and that it is looking at adding in group audio conversations for customers to build their own Clubhouse clones.

“We are getting enquiries,” said Kim. “We will be setting it up in a personalized way. Voice chat has certainly picked up due to Clubhouse.”

The funding — oversubscribed, the company says — is being led by Steadfast Financial, with Softbank’s Vision Fund 2 also participating, along with previous backers ICONIQ Capital, Tiger Global Management, and Meritech Capital. It comes about two years after Sendbird closed its Series B at $102 million, and the startup appears to have nearly doubled its valuation since then: PitchBook estimates it was around $550 million in 2019.

That growth, in a sense, is not a surprise, given not just the climate right now for virtual interaction, but the fact that Sendbird itself has tripled the number of customers using its tools since 2019. The company, co-headquartered in Seoul, Korea and San Mateo, has now raised around $221 million.

The market that Sendbird has been pecking away at since being founded in 2013 is a hefty one.

Messaging apps have become a major digital force, with a small handful of companies overtaking (and taking on) the primary features found on the most basic of phones and finding traction with people by making them easier to use and full of more interesting features to use alongside the basic functionality. That in turn has led a wave of other companies to build in their own communications features, a way both to provide more community for their users, and to keep people on their own platforms in the process.

“It’s an arms race going on between messaging and payment apps,” Sid Suri, Sendbird’s marketing head, said to me in describing the competitive landscape. “There is a high degree of urgency among all businesses to say we don’t have to lose users to any of them. White label services like ours are powering the ability to keep up.”

Sendbird is indeed one of a wave of companies that have identified both that trend and the opportunity of building that functionality out as a commodity of sorts that can be embedded anywhere a developer chooses to place it by way of an API. It’s not the only one: others in the same space include publicly-listed Twilio, the similarly-named competitor MessageBird (which is also highly capitalised and has positioned itself as a consolidator in the space), PubNub, Sinch, Stream, Firebase and many more.

That competition is one reason why Sendbird has raised money. It gives it more capital to bring on more users, and critically to invest in building out more functionality alongside its core features, to address the needs of its existing users, and to discover new opportunities to provide them with features they perhaps didn’t know they needed in their messaging channels to keep users’ attention.

“We are doing a lot around transactions and payments, as well as logistics,” Kim said in an interview. “We are really building out the end to end experience [since that] really ties into engagement. A couple of new features will be heavily around transactions, and others will be around more engagement.”

Karan Mehandru, a partner at Steadfast, is joining the board with this round, and he believes that there remains a huge opportunity especially when you consider the many verticals that have yet to adopt solid and useful communications channels within their services, such as healthcare.

“The channel that Sendbird is leveraging is the next channel we have come to expect from all brands,” he said in an interview. “Sendbird may look the same as others but if you peel the onion, providing a scalable chat experience that is highly customized is a real problem to solve. Large customers think this is critical but not a core competence and then zoom back to Sendbird because they can’t do it. Sendbird is a clear leader. Sendbird is permeating many verticals and types of companies now. This is one of those rare companies that has been at the right place at the right time.”


By Ingrid Lunden

Pindrop raises $90M to bring its voice-fraud prevention to IoT devices and Europe

When it comes to how humans communicate with each other or with machines, voice is a major interface, with growth in the latter fuelled by the rise of artificial intelligence, faster computing technology and an explosion of new devices — some of which only, or primarily, work with voice commands. But the supreme reign of voice has also opened a window of opportunity for malicious hackers — specifically, in the area of voice fraud.

Now, a security startup called Pindrop is announcing that it has raised $90 million to tackle this with a platform that it says can identify even the most sophisticated impersonations and hacking attempts, by analysing nearly 1,400 acoustic attributes to verify if a caller or a voice command is legit.

“We live in a brave new world where everything you thought you knew about security needs to be challenged,” said Vijay Balasubramaniyan, co-founder, CEO and CTO of Pindrop, who built the company (with co-founders Ahamad Mustaque and Paul Judge) originally out of his PhD thesis.

The funding is a growth round aimed specifically at two areas. First, taking US-based Pindrop into more international markets, starting with Europe — Vijay spoke to me in London — and coming soon to Asia. And second, to expand from customer service scenarios — the vast majority of its business today — into any applications that use voice interfaces, such as connected car platforms, home security devices, smart offices and smart home speakers.

To that end, this Series D includes a mix of strategic and financial investors: led by London’s Vitruvian Partners, it also includes Allegion Ventures (the corporate venture arm of the security giant), Cross Creek, systems integrator Dimension Data (“As you grow you want to be able to sell through partners,” Balasubramaniyan says), Singapore-based EDBI (to help with its push into Asia), and Goldman Sachs. Google’s CapitalG, IVP, Andreessen Horowitz, GV and Citi Ventures — all previous investors — were also in this round.

(The latter group of investors also has at least one strategic name in it: Pindrop is already working with Google, the CEO said.)

Valuation is not being disclosed, but in Pindrop’s Series C round in 2017, the company was valued at $600 million post-mioney, according to PitchBook, and the valuation now is “much higher,” Balasubramaniyan said with a laugh. The company’s raised $212 million to date.

The crux of what Pindrop has built is a platform that makes a voice “fingerprint” that identifies not just the specific tone you emit, but how you speak, where you are typically calling from and the sounds of that space, and even your regular device — something we can do now with the rise of smartphones that we typically don’t share with others — with each handset having a unique acoustic profile. Matching all these against what is determined to be your “normal” circumstances helps to start to build verification, Balasubramaniyan explained.

Founded in 2011 in Atlanta, GA, most of Pindrop’s business today has been built around helping to prevent voice fraud in customer service engagements. That business, Balasubramaniyan said, is on the path to profitability by the first quarter of 2019 and continues to grow well, with a voice fraud problem in the space that costs the industry $22 billion ($14 billion in fraud, $8 billion in time and systems wasted on security questions). (Pindrop claims it has stopped over $350 million in voice-based fraud and attacks so far  in 2018.)

Current customers include eight of the 10 largest banks and five largest insurance companies in the U.S., with more than 200 million consumer accounts protected at the moment. 

“There are 3.6 million agents in customer service jobs in the UK, with one in every 89 people in the US in this role,” he noted. “But last year, there there were 4.4 million new assistants added to the market,” referring to all the devices, apps and services that have hit us, “and that’s where we realised that it’s about expansion for us.”

In cases like connected home or office scenarios, some of the ways that these might get hacked are only starting to become apparent.

Balasubramaniyan noted that it can be something as innocent as a little girl ordering an expensive doll house while playing with Alexa (Pindrop is also now starting to work with Amazon, too, as it happens), or something more nefarious like a fraudster calling your answering machine to command your smart home hub to unlock your front door.

But we are unlikely to turn away from voice interfaces, and that is where a company like Pindrop (as well as competitors like Verint) come in.

“Voice-enabled interfaces are expanding how consumers interact with IoT devices in their everyday lives – as well as IoT manufacturers’ ability to offer smarter and stronger solutions,” said Allegion Ventures President Rob Martens, in a statement. “We’re excited about the future of voice technology and see Pindrop as a pioneer in the space. We look forward to working with Vijay and his team to accelerate the adoption of voice technology into new markets.”

More generally, as we see the rise of more voice services it’s only natural that we will start to see more ways of trying to hack them. Pindrop puts an interesting focus on the aural details of an experience as a way of helping to fight that. It’s detail that we often overlook in today’s very visual culture, but it’s also in a way a return to more analogue days.

Balasubramaniyan said one of his inspirations for the startup was a story he read as a child in 2600, the Hacker publication, that stuck with him, about Bell Labs. There, they had a team of blind engineers who could identify problems on a phone line by listening to the dial tone. “They had golden hearing,” he said.

 


By Ingrid Lunden