Kore.ai retains advisor for Series C, plans to expand to Japan, CEO says

12 March 2020 - 02:26 pm UTC

by Rachel Stone in Charlottesville, Virginia

Kore.ai, an Orlando, Florida-based conversational AI software startup, is looking to raise Series C capital to fund geographic growth, according to CEO Raj Koneru.

 

Kore.ai retained Marlin & Associates for its USD 11m growth investment in November 2019 and has already engaged the firm as a financial advisor for its Series C, which it is looking to complete in the next quarter. Vistara Capital Partners made the recent investment, pushing the AI company’s total funding to more than USD 60m.

 

A traditional growth investor in the technology space could lead the Series C, though several strategic investors have already reached out about participating, Koneru said. The company expects to reach profitability within the next fiscal year and has already received offers from potential buyers, but the executive said it was too early to sell.

 

Instead, it aims to raise between USD 30m and USD 50m to use over the next two to three years to expand sales and marketing and, to a lesser extent, on product development.

 

In the upcoming fiscal year, which starts 1 April, Kore.ai plans to start selling in Japan. It has found “very high demand” for conversational AI technology in the country, which is also the third-largest economy in the world, Koneru said. North America is Kore.ai’s primary market, though it also operates in Europe, the Middle East and Asia Pacific.

 

Kore.ai’s customer can speak to the conversational assistant, or chatbot, in 30 different languages. Today, Kore.ai employees can only use English to create that assistant, but the company is translating its products into Japanese as well.

 

Koneru, who invested USD 47m into the company in a combination of equity and debt, holds majority ownership and does not expect that to change following the Series C.

 

Though Koneru declined to share specific revenue numbers, he said Kore.ai has between USD 15m and USD 20m in run-rate revenue. In this fiscal year, which ends 31 March, the startup is projecting to have grown 100% in both revenue and annual recurring revenue, Koneru said.



The company, which is cash flow break even, makes money through a subscription revenue model, in which the subscription value is based on the customer’s expected usage for either the number of users or sessions.



It has about 75 customers on the Forbes Global 2000, which is an annual ranking of the top 2,000 public companies in the world based on a mix of sales, profit, assets and market value.



Companies on that list — with a focus in banking, insurance, consumer packaged goods, pharmaceuticals and healthcare — are Kore.ai’s target customers, Koneru said.

 

Amid a global economic threat from COVID-19, Kore.ai could see an uptick in demand, Koneru said. The company, which has launched IT and HR help desk solutions in addition to its enterprise digital assistant, helps companies facilitate remote interactions.

 

In Europe, Kore.ai has customers in the UK, the Nordics, Germany and France. In the Middle East, the company primarily does business in the UAE, Kuwait and Saudi Arabia. In the Asia-Pacific region, it operates in South Korea, Singapore and other parts of Southeast Asia, Australia and New Zealand, Koneru added.

 

The company is planning to add 100 people to its existing 300 employees. Most of that expansion will be outside the US, which only houses 20% of its employees, primarily in management, sales and marketing. Kore.ai’s development team, or 80% of its workforce, is in India.

 

Kore.ai is actively building out sales and marketing teams in London and Dubai and will look to set up an office in Tokyo when it enters Japan, Koneru said.

 

The AI company competes against large cloud providers like Alphabet’s GoogleMicrosoftAmazon, and IBM Watson by IBM. It also competes with pure-play providers such as IPSoft and Avaamo, among other small companies that have sprung up, Koneru said.



Although Kore.ai ultimately wants to expand into workflows, robotic process automation and machine learning, Koneru does not anticipate acquiring in the near term.

 

“We're not in the mode of either buying somebody or being bought up,” Koneru said.