May
20
2020
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Directly, which taps experts to train chatbots, raises $11M, closes out Series B at $51M

Directly, a startup whose mission is to help build better customer service chatbots by using experts in specific areas to train them, has raised more funding as it opens up a new front to grow its business: APIs and a partner ecosystem that can now also tap into its expert network. Today Directly is announcing that it has added $11 million to close out its Series B at $51 million (it raised $20 million back in January of this year, and another $20 million as part of the Series B back in 2018).

The funding is coming from Triangle Peak Partners and Toba Capital, while its previous investors in the round included strategic backers Samsung NEXT and Microsoft’s M12 Ventures (who are both customers, alongside companies like Airbnb), as well as Industry Ventures, True Ventures, Costanoa Ventures and Northgate. (As we reported when covering the initial close, Directly’s valuation at that time was at $110 million post-money, and so this would likely put it at $120 million or higher, given how the business has expanded.)

While chatbots have now been around for years, a key focus in the tech world has been how to help them work better, after initial efforts saw so many disappointing results that it was fair to ask whether they were even worth the trouble.

Directly’s premise is that the most important part of getting a chatbot to work well is to make sure that it’s trained correctly, and its approach to that is very practical: find experts both to troubleshoot questions and provide answers.

As we’ve described before, its platform helps businesses identify and reach out to “experts” in the business or product in question, collect knowledge from them, and then fold that into a company’s AI to help train it and answer questions more accurately. It also looks at data input and output into those AI systems to figure out what is working, and what is not, and how to fix that, too.

The information is typically collected by way of question-and-answer sessions. Directly compensates experts both for submitting information as well as to pay out royalties when their knowledge has been put to use, “just as you would in traditional copyright licensing in music,” its co-founder Antony Brydon explained to me earlier this year.

It can take as little as 100 experts, but potentially many more, to train a system, depending on how much the information needs to be updated over time. (Directly’s work for Xbox, for example, used 1,000 experts but has to date answered millions of questions.)

Directly’s pitch to customers is that building a better chatbot can help deflect more questions from actual live agents (and subsequently cut operational costs for a business). It claims that customer contacts can be reduced by up to 80%, with customer satisfaction by up to 20%, as a result.

What’s interesting is that now Directly sees an opportunity in expanding that expert ecosystem to a wider group of partners, some of which might have previously been seen as competitors. (Not unlike Amazon’s AI powering a multitude of other businesses, some of which might also be in the market of selling the same services that Amazon does).

The partner ecosystem, as Directly calls it, use APIs to link into Directly’s platform. Meya, Percept.ai, and SmartAction — which themselves provide a range of customer service automation tools — are three of the first users.

“The team at Directly have quickly proven to be trusted and invaluable partners,” said Erik Kalviainen, CEO at Meya, in a statement. “As a result of our collaboration, Meya is now able to take advantage of a whole new set of capabilities that will enable us to deliver automated solutions both faster and with higher resolution rates, without customers needing to deploy significant internal resources. That’s a powerful advantage at a time when scale and efficiency are key to any successful customer support operation.”

The prospect of a bigger business funnel beyond even what Directly was pulling in itself is likely what attracted the most recent investment.

“Directly has established itself as a true leader in helping customers thrive during these turbulent economic times,” said Tyler Peterson, Partner at Triangle Peak Partners, in a statement. “There is little doubt that automation will play a tremendous role in the future of customer support, but Directly is realizing that potential today. Their platform enables businesses to strike just the right balance between automation and human support, helping them adopt AI-powered solutions in a way that is practical, accessible, and demonstrably effective.”

In January, Mike de la Cruz, who took over as CEO at the time of the funding announcement, said the company was gearing up for a larger Series C in 2021. It’s not clear how and if that will be impacted by the current state of the world. But in the meantime, as more organizations are looking for ways to connect with customers outside of channels that might require people to physically visit stores, or for employees to sit in call centres, it presents a huge opportunity for companies like this one.

“At its core, our business is about helping customer support leaders resolve customer issues with the right mix of automation and human support,” said de la Cruz in a statement. “It’s one thing to deliver a great product today, but we’re committed to ensuring that our customers have the solutions they need over the long term. That means constantly investing in our platform and expanding our capabilities, so that we can keep up with the rapid pace of technological change and an unpredictable economic landscape. These new partnerships and this latest expansion of our recent funding round have positioned us to do just that. We’re excited to be collaborating with our new partners, and very thankful to all of our investors for their support.”

Jan
17
2019
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Alation announces $50M Series C investment as data catalog biz takes off

Alation, a startup that helps crawl a company’s databases in order to build a data search catalog, announced a $50 million Series C investment today.

The round was led by Sapphire Ventures and Salesforce Ventures. Existing investors Costanoa Ventures, DCVC (Data Collective), Harmony Partners and Icon Ventures also participated. Today’s investment brings the total raised to $82 million, according to Crunchbase data.

The participation of Sapphire Ventures, originally launched by SAP, and Salesforce Ventures, the venture arm of Salesforce, is particularly telling. One of the issues these enterprise software companies face when they go inside large enterprises is helping customer’s access and understand data wherever it lives. It’s one of the reasons that Salesforce bought MuleSoft for $6.5 billion last year.

This is a problem that employees face, as well. It’s simply inefficient to query multiple databases manually, or to even know what databases exist inside a large organization. Alation uses out-of-the-box connectors to connect to common data sources like Oracle, Redshift, Teradata, Spark and Tableau to create a centralized data catalog.

With that catalog in place, employees can search just as they would with any enterprise search engine, with the notable difference that this tool is focused strictly on structured data inside of supported data sources.

The company goes beyond pure matching to find the data an employee is searching for. Company CEO and co-founder Satyen Sangani says they also use a method to analyze usage to display the most likely result. “What differentiates us in particular is that we look at the logs of how people are using that information,” he explained. This is analogous to how Google uses the PageRank algorithm to measure the popularity of a page based on the number of times people link to a page.

Alation catalog page. Screenshot: Alation

It is certainly not alone in the space, with competitors like Alteryx and Informatica, but Alation’s approach seems to be resonating. Sangani reports triple-digit growth four years running. The company has soared from 89 employees at the end of last year to around 200 today. It boasts 100 large enterprise customers in production, including names like BMW, Hilton, American Express and Salesforce (whose investment arm, Salesforce Ventures also helped lead today’s round).

As the company grows rapidly, Sangani says he wants the capital in place to help fuel the increasing interest. The size and scope of his customers means that he will need to hire not just engineers to keep developing the product and building new connectors, but customer support and sales and marketing. In all, he expects to add between 100 and 200 employees in the next year.

He also wants to continue building out partnerships. As an example, Teradata is an authorized reseller, and has helped sell the product in global markets where a startup like Alation might lack the resources to enter.

Based in Redwood City, Calif., the company launched in 2012 and released the first version of the product in 2014. Its most recent round prior to today was a $23 million Series B in 2017.

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