Chatbots and other kinds of AI agents — and the companies that build them — may feel like a dime a dozen these days. But the truth is that, for both businesses and consumers, some may be infinitely more useful (and perhaps less dystopian) than others. Today, a startup that’s built a successful business around that concept is announcing a major growth round to expand its business. Manychat, which provides brands with a tool for managing and automating conversations and engagement across multiple messaging channels, has picked up $140 million led by Summit Partners.
The funding is coming on the heels of strong growth for the startup. Manychat today has around 1.5 million customers across 170 countries, with the client list including the likes of Nike, the New York Times and Yahoo (the current owner of TechCrunch) as well as individual creators and much smaller outfits.
CEO and co-founder Mike Yan said Manychat sends “billions” of messages annually on behalf of these users across TikTok, Instagram, WhatsApp, Messenger and other chat platforms. The plan will be to use this latest Series B round of funding both to invest in R&D — in particular bringing more AI into the platform — as well as to boost the company’s sales, marketing and support globally.
Notably for a startup these days, Manychat is mostly profitable — mostly, because as Yan describes it, “We always operate on the edge of being kind of break even.”
Since launching a decade back in 2015, it has only raised around $23 million, mostly from this $18 million Series A round in 2019 led by Bessemer with participation from Flint Capital. (Manychat did not disclose what other investors are in this latest round beyond Summit.) The company is not giving out a valuation but it’s likely to be considerably higher than the modest $58 million post-money valuation PitchBook detailed for the Series A.
From Telegram to Instagram
Manychat’s trajectory mirrors both the rise of smartphone-based messaging apps over the last decade, as well as the growing opportunity around tooling for helping businesses to leverage that medium in a better way.
In 2015, the email inbox was starting to tip into becoming a spam-laden, tired, and over-used medium for businesses looking to use it for marketing.
Yan was coming off the back of a failed social app, and he himself was a Telegram user, one of a growing population of consumers using messaging apps for basic communications. When Telegram opened up its APIs, the lightbulb of inspiration went off for him and his co-founder Anton Morin.
“Telegram was actually one of the first western messaging apps to open up its APIs,” he recalled. “As users of Telegram ourselves, and we saw a clear job to be done.” Companies were using email to connect to users, he said, but that was not where users were spending time. “They should be using messaging apps actually to connect with customers, that’s where the new wave of communication is happening. That’s where the new consumer is.”
So he and Gorin built the first iteration of Manychat as a tool for creating chats for businesses on Telegram. It picked up enough traction to get them into the 500 Startups accelerator.
Then, when Facebook opened up its APIs for Messenger — making its own first-efforts to build AI chatbots — things really started to take off. By the time Manychat raised its Series A in 2019, it was already reaching 350 million users on the platform monthly with billions of messages and an enviable open rate of 80%.
Additional APIs opening up across other Meta-owned platforms as well as TikTok have boosted that growth. Users can still market on Telegram, too, Yan said, although these days that is just a small percentage of its traffic. For the record, Instagram is far and away the most engaged and active platform for the company today, Yan said.
Manychat’s founding and a large chunk of its growth preceded the rise of generative AI and the emergency of AI chatbots like Anthropic’s Claude, OpenAI’s ChatGPT, and Google’s Gemini, among others. In fact, the earlier descriptions of the product touted how it provided a “smart blend of automation and personal outreach” to customers, who were using its no-code platform to build chatbots to grow social followers, collect email addresses, respond to comments and set up flows via DM links to request products or more information on something.
Anchoring its product around encouraging further actions, Yan said, is what sets it apart from most chatbots on the market right now, including most GenAI chatbots.
Sophia Popova, the Summit partner who led the investment and is joining the board of the startup, believes that Manychat’s approach of building out an engagement layer that’s seen a lot of success so far makes it a solid bet for the next wave of activity on messaging platforms.
“Our thesis hinges on a greater proportion of commerce dollars going through social messaging apps,” she said in an interview. “You need to be always on and engaging 24/7. That is what customers expect and Manychat is hitting the nail on the head.” In contrast, she said, when considering the DNA of the AI chatbots — at least what is in the market today — “very few of them are geared towards personalizing conversation in a way that drives conversion to revenue.”
If you want a help desk chatbot, there are “myriad” tools out there, but actually very few that are engaging to sell or elicit other responses from users in the way that Manychat has done, she added.
Yet given the pace of development — and the drive that many of the AI startups have to generate revenue to offset their huge cash burn — this is a gap that may not be there for long, one reason why Manychat is working to build in more AI features to improve its offering.