Chatbots and other kinds of AI agents may feel like a dime a dozen these days. But the truth is that, for both businesses and consumers, some may be infinitely more useful (and perhaps less dystopian) than others.
Today, a startup that’s built a successful business around that concept is announcing a major growth round to expand its business. Manychat, which provides a tool for managing and automating conversations and engagement across multiple messaging channels, has picked up $140 million in a Series B round led by Summit Partners.
The funding is coming on the heels of strong growth for the startup. Manychat today has around 1.5 million customers across 170 countries, with its client list including the likes of Nike, the New York Times and Yahoo as well as individual creators and much smaller outfits.
Manychat’s CEO and co-founder, Mike Yan, said the company sends “billions” of messages annually on behalf of these users across TikTok, Instagram, WhatsApp, Messenger and other chat platforms. The plan is to use the fresh cash both to invest in R&D — in particular, bring more AI to the platform — as well as to boost the company’s sales, marketing and support globally.
Notably for a startup these days, Manychat is mostly profitable — as Yan describes it, the company “always operates on the edge of being kind of break even.”
Since launching in 2015, the startup had only raised around $23 million until now, mostly from a $18 million Series A round in 2019.
Manychat did not disclose who the other investors are in this Series B round beyond Summit. The company is not giving out a valuation, either, but it’s likely to be considerably higher than the modest $58 million post-money price tag PitchBook detailed for the Series A.
From Telegram to Instagram
Manychat’s trajectory mirrors both the rise of smartphone-based messaging apps over the last decade, as well as the growing opportunity around tools that help businesses leverage that medium in a better way.
In 2015, the email inbox was starting to tip into becoming a spam-laden, tired, and over-used medium for businesses looking to use it for marketing.
Yan at the time was fresh off the back of a failed social app, and he himself was a Telegram user, one of a growing population of consumers using messaging apps for basic communications. When Telegram opened up its APIs, the lightbulb of inspiration went off for him and his co-founder Anton Gorin.
“Telegram was actually one of the first western messaging apps to open up its APIs,” he recalled. “As users of Telegram ourselves, we saw a clear job to be done.” Companies were using email to connect to users, he said, but that was not where users were spending time. “They should be using messaging apps actually to connect with customers; that’s where the new wave of communication is happening. That’s where the new consumer is.”
So he and Gorin built the first iteration of Manychat as a tool for creating chats for businesses on Telegram. It picked up enough traction to get them into the 500 Startups accelerator.
Things started to take off when Facebook opened up its APIs for Messenger. By the time Manychat raised its Series A in 2019, it was already reaching 350 million users on the platform monthly, with billions of messages and an enviable open rate of 80%.
Additional APIs opening up across other Meta-owned platforms as well as TikTok have boosted that growth. Users can still market on Telegram, too, Yan said, although these days that is just a small percentage of its traffic. Instagram is by far the most engaged and active platform for the company today, Yan said.
Manychat’s founding and a large chunk of its growth preceded the rise of generative AI and the emergence of AI chatbots like Anthropic’s Claude, OpenAI’s ChatGPT, and Google’s Gemini. In fact, earlier descriptions of Manychat touted how it provided a “smart blend of automation and personal outreach” to customers, who were using its no-code platform to build chatbots to grow social followers, collect email addresses, respond to comments and set up flows via DM links to request products or more information.
Anchoring its product around encouraging further actions, Yan said, is what sets his company apart from most chatbots on the market right now, including most generative AI chatbots.
Sophia Popova, the Summit partner who led the investment (and is joining the board of the startup), believes that Manychat’s approach of building an engagement layer makes it a solid bet for the next wave of activity on messaging platforms.
“Our thesis hinges on a greater proportion of commerce dollars going through social messaging apps,” she said in an interview. “You need to be always on and engaging 24/7. That is what customers expect, and Manychat is hitting the nail on the head.” In contrast, she said, when considering the DNA of the AI chatbots, “very few of them are geared towards personalizing conversation in a way that drives conversion to revenue.”
If you want a help desk chatbot, there are myriad tools out there, but very few that are engaging to sell or elicit other responses from users in the way that Manychat has done, she added.
Yet, given the pace of development — and AI startups’ motivation to generate revenue to offset huge cash burn — this gap may not be present for long. That’s one reason Manychat is working to build in more AI features to improve its offering.
