Malaysian AI-powered messaging app Respond.io raises $62.5 million and eyes acquisitions

In 2017, reply.io It launched to solve a simple problem: businesses couldn’t keep up with customers moving to messaging apps. Today, Respond, with its customer conversation management software, has become one of Malaysia’s technology success stories.

The startup, headquartered in Kuala Lumpur, has raised a $62.5 million Series B funding round led by Camber Partners, with participation from Endeavor Catalyst and existing investors. I finally lifted Series A of $7 million In 2022. The company has grown to $35 million in annual recurring revenue (ARR), up 169% year over year, with a 30% profit margin, he told TechCrunch.

Co-founder and CEO Gerardo Salandra, who worked at IBM and Google before joining Runtastica fitness tracking app sold to Adidas in 2015, founded Respond in Hong Kong in 2017 alongside Hassan Ahmed (CTO) and Laroslaw Kudritsky (COO). The team moved the business to Malaysia two years later.

The platform helps medium and large-sized B2C businesses generate revenue from customer conversations across multiple messaging channels including WhatsApp, Instagram, TikTok, Messenger, Line, Telegram, WeChat, voice calls and online chat. It also uses AI agents to automatically handle large volumes of customer inquiries, qualify leads, and close sales without human intervention.

Salandra described its core customers as “high-interest” companies, where customers need to talk to someone before purchasing, such as healthcare, automotive, retail, education and travel. “You don’t go to a website, put in your credit card, and buy a car; you talk to someone, and you ask a lot of questions,” he said. Its sweet spot is companies with 200 to 10,000 employees.

The rise of AI has raised an obvious question for platforms like Respond: Can tools like ChatGPT simply replace what you created?

Salandra believes his foothold is strong enough to stop such encroachment, should it occur. The company currently processes 2 billion messages every quarter.

“If you just look at the numbers, every day that AI becomes more prominent, we grow faster,” he told TechCrunch. “We don’t see what the public SaaS markets see.”

Part of that comes down to pricing, he said. Unlike competing enterprise software that charges per seat, response fees are based on the volume of customer conversations, meaning it doesn’t matter whether it’s a human or AI that answers. “When fewer people use your product, they make less money,” he said. “But we don’t charge like that.”

Existing platforms, especially those dominant in North America and Europe, were built on email and phone calls. “Existing platforms have focused on messaging as an afterthought. They’re very focused on email, they’re very focused on calls, but when it comes to messaging, it’s an afterthought,” Salandra said.

This volume of messaging data creates a feedback loop, according to the CEO. More messages mean better AI. Better AI attracts more customers. More customers generate more messages. “This is what we call the data flywheel,” Salandra said. He added that a head start is important for any AI startup as well. “Because we started a long time ago and have a strong foundation, we can provide better AI than someone who just got into messaging.”

With the new capital, Salandra said the company plans to pursue hiring, organic growth and acquisitions. The CEO has two types of purchasing goals in mind: proven technology that fits into his existing ecosystem, and creating teams with strong customer bases in strategic markets such as Europe and North America. “Imagine how many months I could save if I found the right company that probably already had the clients and the team,” he said. “I can save myself six months to a year with an acquisition.” He confirmed that the company is already in talks with two potential targets.

The geographic push makes strategic sense. Respond currently generates approximately 30% of its revenue from the Asia Pacific region, 30% from Latin America, and 20% from the Middle East and Africa, leaving North America and Western Europe at just 20%. But Salandra says these areas are now the fastest growing. “They took longer to make the change, but now they are moving very quickly into messaging channels,” he said, adding that he expects the two regions to become the company’s largest segment within two to three years.

Despite the new capital infusion, Salandra is cautious about what comes next. “We don’t want to be a growth company at any cost,” he said. “Even with this money, we will be very disciplined.” But Salandra has bigger plans in mind. “My favorite score?” He said. “Ring the bell at Nasdaq.”