Messaging is the medium these days, and today a startup that has built an API to help others build text and video interactivity into their services is announcing a big round to continue scaling its business. Sendbird, a popular provider of chat, video and other interactive services to the likes of Reddit, Hinge, Paytm, Delivery Hero and hundreds of others by way of a few lines of code, has closed a round of $100 million, money that it plans to use to continue expanding the functionalities of its platform to meet our changing interactive times. Sendbird has confirmed that the funding values the company at $1.05 billion.
Today, customers collectively channel some 150 million users through Sendbird’s APIs to chat with each other and large groups of users over text and video, a figure that has seen a lot of growth in particular in the last year, where people were spending so much more time in front of screens as their primary interface to communicate with the world.
Sendbird already provides some services around that core functionality such as moderation and text search. John Kim, Sendbird’s CEO and founder, said that additional developments like moderation has seen a huge take-up, and services it plans to add into the mix include payments and logistics features, and that it is looking at adding in group audio conversations for customers to build their own Clubhouse clones.
“We are getting enquiries,” said Kim. “We will be setting it up in a personalized way. Voice chat has certainly picked up due to Clubhouse.”
The funding — oversubscribed, the company says — is being led by Steadfast Financial, with Softbank’s Vision Fund 2 also participating, along with previous backers ICONIQ Capital, Tiger Global Management, and Meritech Capital. It comes about two years after Sendbird closed its Series B at $102 million, and the startup appears to have nearly doubled its valuation since then: PitchBook estimates it was around $550 million in 2019.
That growth, in a sense, is not a surprise, given not just the climate right now for virtual interaction, but the fact that Sendbird itself has tripled the number of customers using its tools since 2019. The company, co-headquartered in Seoul, Korea and San Mateo, has now raised around $221 million.
The market that Sendbird has been pecking away at since being founded in 2013 is a hefty one: messaging apps have become a major digital force, with a small handful of companies overtaking (and taking on) the primary features found on the most basic of phones and finding traction with people by making them easier to use and full of more interesting features to use alongside the basic functionality. That in turn has led a wave of other companies to build in their own communications features, a way both to provide more community for their users, and to keep people on their own platforms in the process.
Sendbird is one of a wave of companies that have identified both that trend and the opportunity of building that functionality out as a commodity of sorts that can be embedded anywhere a developer chooses to place it by way of an API. It’s not the only one: others in the same space include publicly-listed Twilio, MessageBird (which is also highly capitalised and has positioned itself as a consolidator in the space), PubNub, Sinch, Stream, Firebase and more.
That competition is one reason why Sendbird has raised money. It gives it more capital to bring on more users, and critically to invest in building out more functionality alongside its core features, to address the needs of its existing users, and to discover new opportunities to provide them with features they perhaps didn’t know they needed in their messaging channels to keep users’ attention.
“We are doing a lot around transactions and payments, as well as logistics,” Kim said in an interview. “We are really building out the end to end experience [since that] really ties into engagement. A couple of new features will be heavily around transactions, and others will be around more engagement.”
Karan Mehandru, a partner at Steadfast, is joining the board with this round, and he believes that there remains a huge opportunity especially when you consider the many verticals that have yet to adopt solid and useful communications channels within their services, such as healthcare.
“The channel that Sendbird is leveraging is the next channel we have come to expect from all brands,” he said in an interview. “Sendbird may look the same as others but if you peel the onion, providing a scalable chat experience that is highly customized is a real problem to solve. Large customers think this is critical but not a core competence and then zoom back to Sendbird because they can’t do it. Sendbird is a clear leader. Sendbird is permeating many verticals and types of companies now. This is one of those rare companies that has been at the right place at the right time.”