Chatbots and other types of AI agents may feel like a dozen these days. But the truth is that for both businesses and consumers, some are infinitely more useful (and perhaps fewer dystopians) than others.
Today, startups that have built successful businesses around that concept are unveiling a major growth round to expand their business. Manychat, which provides tools to automate conversation and engagement across multiple messaging channels, has won $140 million in the Series B round led by Summit Partners.
Funding continues to be strong growth in startups. Today, Manychat has around 1.5 million customers in 170 countries, with client lists such as Nike, The New York Times, Yahoo, and other client lists that include individual creators and much smaller outfits.
Manychat CEO and co-founder Mike Yan said that across Tiktok, Instagram, WhatsApp, Messenger and other chat platforms, they send “billions” of messages on behalf of these users each year. The plan is to use fresh cash to bring more AI to the platform, especially to invest in R&D, and to promote the company's sales, marketing and support globally.
Many chats are mostly profitable, especially for startups these days. As Yang explains it, the company “always operates on the edge of the break.”
Since its launch in 2015, the startup has raised only about $23 million up until now. This is mainly from the 2019 $18 million Series A round.
Many chats have not revealed who other investors are past the summit in this Series B round. The company also doesn't provide ratings, but it could be significantly higher than the Series A detailed $58 million Money Post Money Price Tag Pitchbook.
From Telegram to Instagram
Manychat's trajectory reflects both the rise of smartphone-based messaging apps over the past decade and the growth opportunities for tools that will help businesses leverage their medium in a better way.
In 2015, email inboxes began to become a tired, tired medium with spam, for businesses they were trying to use for marketing.
At the time, Yan was fresh from behind the failed social app, and he himself was a telegram user and one of a group of consumers using messaging apps for basic communication. When Telegram opened the API, the inspirational bulb went out for him and his co-founder Anton Gorin.
“Telegram was actually one of the first Western messaging apps to open an API,” he recalls. “We saw clear work being done because Telegram users are themselves,” he said companies were using email to connect with users, but that wasn't where users were spending their time. “They need to use messaging apps to actually connect with their customers. That's where a new wave of communication is taking place. There's a new consumer out there.”
So he and Golin built the first iteration of Manychat as a tool to create chats for business on Telegram. It gained enough traction to put it in the 500 startup accelerator.
Things began to take off when Facebook opened the Messenger API. By the time ManyChat raised Series A in 2019, it had already reached 350 million users on the platform with billions of messages and an enviable open rate of 80%.
Additional APIs have been opened across other meta-owned platforms and Tiktok, increasing their growth. Users can also sell on Telegram, Yan said, but these days it's only a small portion of the traffic. Instagram is today the most enthusiastic and active platform for the company, Yan said.
Most of the establishment of Manychat and its growth preceded the rise in generative AI and the emergence of AI chatbots like Anthropic's Claude, Openai's Chatgpt, and Google's Gemini. In fact, previous descriptions from Manychat promoted how it offered a “smart blend of automation and personal outreach” to customers who were using the no-code platform to build chatbots to set up flows through DM links, such as social followers growing, collecting email addresses, responding to comments, and more.
Yan said fixing the product around fostering further action stands out from most chatbots currently on the market, including most generative AI chatbots.
Sophia Popova, the investment-led summit partner, believes that many chat approaches to building engagement layers will be a solid bet on the next wave of activity on the messaging platform.
“Our paper depends on the majority of commerce dollars going through social messaging apps,” she said in an interview. “You need to be involved 24/7 all year round. That's what customers expect, and a lot of chats are hitting their heads.” In contrast, given the DNA of AI chatbots, “few people are directed towards personalizing conversations in ways that drive conversion to revenue,” she said.
If you want a help desk chatbot, there are countless tools, but there are few that are appealing to selling or eliciting other responses from users in the way many chats have done, she added.
However, this gap may not be present for a long time given the pace of development and the incentives for AI startups to generate revenue to offset massive cash burns. That's one of the reasons ManyChat is working to build more AI capabilities to improve its delivery.