Ada Support Inc., an artificial-intelligence startup that has become a leading customer service “chatbot” provider for big Silicon Valley brands, has joined the fast-growing herd of Canadian “unicorns.”
The Toronto company has raised US$130-million in equity led by Spark Capital and backed by Tiger Global Management, and past investors Accel, Bessemer Venture Partners, FirstMark Capital, and Canada’s Leaders Fund and Version One Ventures, valuing Ada at US$1.2-billion. Technology startups that reach that valuation are known as unicorns.
Ada would join a slew of Canadian companies that have become unicorns in recent months either through financings or takeovers, including Hopper Inc., Wealthsimple Technologies Inc., Galvanize Inc., Verafin Inc., AbCellera Biologics Inc., Benevity Inc., and Dapper Labs. Three more have reached unicorn status since mid-April: Clear Finance Technology Corp., Themis Solutions Inc. (known as Clio) and Alphawave IP Group Inc., which secured funding commitments valuing the semiconductor startup at US$4.5-billion as it prepares to go public this month on the London Stock Exchange.
Ada has emerged as an early leader among a competitive field of chatbot providers – makers of software that provides automated answers to customer questions over the internet. It has hundreds of clients including Facebook Inc., Zoom Video Communications Inc., Shopify Inc., Coinbase Global Inc., Square Inc. and Mailchimp, as well as Telus Corp. and AirAsia Group BHD.
The company’s software automates a range of customer interactions, including answering basic enquiries, troubleshooting problems, transactions and onboarding new users. Ada now automates more than 75 per cent of conversations its clients have with their customers, up from 25 per cent two years ago, freeing their customer service representatives to handle high-touch requests. It also recently added an automated marketing tool called Ada Engage.
Ada has returned to its brisk pace of growth since an early, temporary hit in the pandemic that prompted layoffs to more than 20 per cent of staff. It quickly recovered as companies shifted more resources to digital communications; revenue has more than doubled in the past year to an annualized rate of US$30-million and the company’s average contract value has doubled every year since 2018, to a level in the six figures.
The company, which had 150 employees before the pandemic, is on a hiring spree; it added 80 people in the first quarter and plans to double staff, now at 250 people, by year-end.
Ada was co-founded by friends Mike Murchison and David Hariri, now chief executive officer and head of R&D, respectively, in 2014 as Volley Industries. Volley was a social app for people looking to source help from other founders, designers and product professionals. But as Volley expanded it was overrun with customer inquiries. When they asked other digital companies how they dealt with similar challenges, they discovered the issue was widespread.
So the pair, now in their early 30s, changed their business into an automated customer service technology provider in 2016. First they spent a year learning the business, working as remote customer service representatives for seven online companies answering calls and messages. They discovered many questions were repetitive, mundane and easily answered, and that existing software for agents was hard to use. They set out to design Ada to be “Fisher Price simple” to use by agents.
“In the early days of Ada everyone thought we were a cost-oriented chatbot company,” Mr. Murchison said. “That’s never been what we’ve been about. We’ve always been about brand interactions, enabling everyone from the customer to the business to improve the experience.”
Ada says it has reduced customer wait times by up to 98 per cent and solves more than 70 per cent of customer inquiries instantly. That has allowed clients to save or stretch their customer service budgets and increase customer satisfaction scores. Zoom last year was able to automate 70 per cent of in-bound sales enquiries, 98 per cent of support questions from free users and reduce the time account executives devoted to lead generation by one-third as it managed an explosion of pandemic-fuelled demand.
“We were the front door of Zoom across all channels,” Mr. Murchison said. “They could not have survived COVID if not for Ada.”
The funding brings two of the most prominent U.S. tech investors to an ownership group that includes several marquee U.S. and Canadian venture funds.
San Francisco-based Spark has backed Twitter, Slack, Snap and Coinbase, while Tiger, a New York-based hedge fund, is renowned as one of the world’s most prolific and fast-moving early-stage technology investors. Tiger is raising its second multibillion-dollar venture fund of the year after participating in 100 investments so far in 2021, according to PitchBook.
“Ada has carved out an entirely new category in automated customer experience,” Spark Capital General Partner Yasmin Razavi said in a statement. “Companies across all industries and stages increasingly see the quality of their customer experience and communication as a competitive advantage, and yet they are not able to efficiently scale their efforts to meet their customers’ needs. An easy-to-deploy...tool such as Ada is game-changing for any business that aims to offer real-time brand interactions across all channels, products, geographies, and at all times.”
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