Last month we announced that we are leading a US$50 million Series C Funding to power growth at Kore.ai. Read on to learn more about our journey with Kore.ai to today.
First Impressions Pointed to Success
We first encountered Kore.ai in early 2018 when we were introduced to its platform and vision. We enjoyed the conversation and came away very impressed with the pedigree of the company’s founder Raj Koneru, the value proposition of the Kore.ai platform, and the enterprise customers it had landed, especially at that stage of the company’s evolution. While from a scale perspective it was a little too early for Vistara to invest we agreed to stay in touch, noting several brand name potential customers in the near-term pipeline.
When we caught up with Raj and team again in late 2018, the business wasn’t yet at the scale where we typically get involved with companies. However, we did note that many of the potential customers such as Signify and AB InBev that had been in the pipeline when we first spoke had in fact signed up and were now using the platform. Yet again we came away impressed with the ability of the management team to execute and deliver on future expectations.
Kore.ai Tripled in Scale within 18 Months
When we reconnected in mid 2019, the company had almost tripled in scale since we had first spoken with the team 18 months previously. As before, the management demonstrated the consistent ability to close household-name enterprise customers, like Airbus, that were previously mentioned in the pipeline. The company had finally reached the level of scale where Vistara could get involved as an investor.
Our Initial Investment
We worked with the team at Kore.ai to agree on the terms of a convertible debt investment to retire some existing debt and add significant growth capital to the company balance sheet in late 2019. Our intention in using a convertible debt structure was to convert into an expected larger equity round that the company planned to raise over the following couple of years and become a long-term partner to Raj and the management team.
At this point it’s worth pausing to briefly explain the key factors that we considered (and liked) about the Kore.ai product, market, and team.
What We Liked About Kore.ai
As machine learning has improved and driven better product offerings, the use of virtual assistants has not only become more accepted, but it is now recognized as significantly improving and optimizing the customer and employee experience. This realization has led to dramatic market growth. While many of the headlines around automation in call centres (where average employee tenure is usually around 6 months) often revolve around reduction in headcount, this is not how customers tend to think about it. One customer we spoke with pointed out that there are other huge benefits, for example using an AI-based virtual assistant to initially engage with customers significantly shortens wait times. It also improves agent retention rates by allowing them to focus on more complex issues, access information quickly and answer queries with pertinent answers.
Virtual assistants also allow companies to better identify customer and employee interactions that are best suited to being addressed by a human, which leads to a much improved and customized experience.
Key Technology Differentiation
Kore.ai’s proprietary platform technology uses 3 orthogonal NLP engines to enable better understanding of user intent leading to highly relevant responses in multiple languages. It is this key technology differentiator along with its no-code platform that has helped Kore.ai to consistently succeed in landing large customers in RfP “bake-off” type processes, which start on a level playing field. The company’s success in many of these processes that are run by highly sophisticated enterprises is a powerful validation of the platform and functionality the team has built. Furthermore, Kore.ai’s platform approach, where its platform can act as the primary interface to multiple software tools and platforms for an infinite number of customers and employees, is key in reducing “bot sprawl” across enterprises that are acutely aware of limiting the growing proliferation of different software products. From an external validation perspective, Kore.ai’s technology has been identified by Gartner in their recent Conversational AI Platform Competitive Landscape report.
Perhaps most importantly in our eyes, once the platform is in production, Kore.ai provides tremendous value to its customers. We have observed the number of bot interactions or “sessions” at large customers grow exponentially over time from when it is first introduced. The result is improved outcomes and experiences for customers and employees.
We’re also big fans of the pricing model used by Kore.ai, which ensures a very beneficial outcome and strong return on investment for their customers. For us at Vistara, providing much more value to your customers than you capture is something that we always love to see.
Finally, as a five-time founder-entrepreneur Raj has incredible experience and knowledge of building and growing enterprise software companies. In fact, many of the senior team at Kore.ai have come from Raj’s prior companies to form a tight-knit management group. We have developed a great relationship with this team and have observed them execute consistently over time. We believe that the feeling is mutual as Raj’s quote below bears out.
“As a 5-time founder entrepreneur, I have worked with numerous investors at various stages. Vistara has been especially impressive in their involvement with Kore.ai, initially as a lender and now as an equity partner. It’s critical for founders to partner with investors that have had experience not only in good times, but ones that can deal with bumps in the road and help make important decisions in the best interests of the company. I look forward to a continued long-term highly productive relationship with the team at Vistara as we execute on our ambitious growth objectives.”– Raj Koneru, Founder and CEO of Kore.ai
Our Latest Funding
To continue to capitalize on the growth opportunity Kore.ai completed a Series C equity raise with participation from PNC Investments as a strategic investor among the others mentioned. The participation of such a well-regarded strategic investor provides further validation of the technology and the management team. As part of leading this Series C raise, not only did we convert all of our existing convertible debt into equity and take positions on the board, but we also participated further in the round from our most recent fund and actually invested more capital. It has been a long journey from our initial conversation almost 3 years ago with what was then a small company. Having started as a growth debt provider to now being a meaningful equity shareholder in the company we are excited for the next leg!
Interested in Growth Funding?
If you’re interested in growth funding for your mid-stage technology company, talk to us! We would be delighted to discuss our flexible growth capital solutions.