WATI.io has raised $8.3 million in a Series A round led by Sequoia Capital India to expand its new relationship with WhatsApp.
WATI, or WhatsApp Team Inbox, is a new business extension of Clare.ai, a Hong Kong-based startup building chatbots and other artificial-intelligence features for insurance companies and asset managers.
Only now the firm, led by Clare.ai’s co-founders Bianca Ho and Ken Yeung, is integrating with WhatsApp in India and around the world to make it easier for small- and medium-sized enterprises to connect with their own customers and business partners.
Ho told DigFin the Covid pandemic made small businesses value the ability to connect with customers, either for simple queries for store hours or location, or enable a company employee follow up with more complicated discussions in an efficient way.
“WhatsApp is the most global messaging app,” she said. “More and more small businesses depend on it.”
Partnering with WhatsApp
Ho says Clare.ai already had a business relationship with Facebook Messenger. Facebook (now Meta), owns both Messenger and WhatsApp. WhatsApp has focused on growing in India, embedding itself into the communications strategy for various Indian banks.
WhatsApp was eager to deepen its presence, and was looking for tech partners to help. But doing business with WhatsApp is not like working with other social media apps.
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“Partners need to be much more technical,” Ho said. “We have to meet WhatsApp’s needs for end-to-end encryption, which means different infrastructure hosting, not just plugging in APIs. WhatsApp has a fundamentally different technology and usage compared to other messaging platforms.”
WhatsApp offers three business lines. First is its personal communications app. Second is a free business app for customers to make simple queries to a merchant. Third is its Business API service, designed for big companies that have the resources to connect APIs directly to WhatsApp and build their own front ends.
WATI has been created to take the Business API service and structure that into something that SMEs can also use. They might be small merchants eager to communicate with consumers, or they might be ecommerce or online businesses looking to connect with merchants.
These businesses can use WhatsApp instead of email to automate simple queries; arrange business meetings; prompt shoppers who have abandoned a virtual shopping cart to complete a purchase; reply and track questions requiring a human response; and broadcast events, demos, or special offers.
Ho says financial institutions may also be keen to adopt WhatsApp, such as virtual banks that lack a traditional branch network.
Sequoia India support
Before WATI completed its Series A round, it entered Sequoia India’s startup accelerator program. Ho says Sequoia India is helping WATI with refining its business strategy and hiring (particularly as it expands into new markets); the prestige of the Sequoia brand also helps.
In a statement, Sequoia India managing director Abheek Anand said of WATI, “They’ve achieved terrific growth rates this past year while breaking even, but what’s even more exciting is the expansive set of product possibilities in front of the company as they capitalize on the market opportunity.”
VC money means VC milestones to reach the next round of funding, and Ho says WATI has a tough target of growing users by 10 percent to 15 percent every month. “Growth drives everything else,” she said.
India, Brazil, Malaysia and Indonesia are priority markets. WhatsApp has about 50 million business users worldwide, so WATI will focus on markets where WhatsApp is growing.
The startup already has about 3,000 business customers. It says it has grown its customer base by four times in the past six months, and revenues by five times. Ho declined to put hard numbers against those metrics, or disclose the company’s valuation.
As for WATI or Clare.ai’s exit strategy, Ho says it’s too early to plan. “We have ambitions to go IPO one day, but we haven’t begun to think about the details,” she said. The startup has now raised a total of $10 million in funding. Ho declined to reveal its latest valuation.