CHATBOTS: FOLLOWING THE MONEY
By Freddie McMahon – DF2020 Ltd
At this early stage of the chatbot evolution, it is difficult to determine the current state of being able to value chatbot firms. Valuation of new innovations is often influenced on future potential.
A study of 16 firms produced some interesting insights. The selected chatbot firms all have successfully raised funding since June 2016. This provides the opportunity to follow the money in the way investors are placing their bets.
In total these chatbot firms have raised US$370m.
US$24.4m has been raised as Seed Capital by just 7 chatbot firms, with the lowest being US$1.3m and the highest being US$10m. This is quite a high benchmark especially compared to say the UK and Europe.
15 of the 16 Chatbot firms have raised their funds in the USA. The other country was India.
This has worrying implications for both the UK and Europe. Though they are investing in chatbot firms the sums are typically a lot smaller. On the basis chatbots will revolutionise all interactions, which in turn will change every workflow and lead to the obliteration of form filling then the laggard implications are clear.
As reported previously, China has been ahead of the USA in the revolution of chatbots and so this should be kept in mind with these insights.
So here is the leader board covering the 16 firms, categorised by the type of chatbot applications being offered:
- 11 firms – customer conversations (US$327.7m)
- 3 firms – employee conversations (US$30.3m)
- 2 firms – conversational analytics (US$12m) – all seed capital
Chatbots will eventually lead to restructuring organisations so they are turned from inside out whereby employees are mostly serving the customers directly. This will be painful for those firms structured around siloed departments and systems.
The new generation of demand-centric organisations inevitably will lead to a convergence of customer and employee conversations, with conversational data becoming the primary influencer in Big Data analytics.
By following the money for current chatbot investments are themselves lead indicators that conversation-as-a-service is gaining more and more early traction.