Malaysian AI agent-powered messaging app Respond.io raises $62.5M, eye-catching acquisition

In 2017, Respond.io set out to solve a simple problem: businesses couldn’t keep up with customers who had migrated to messaging apps. Today Respond, with its customer chat management software, has become one of Malaysia’s tech success stories.

The startup, headquartered in Kuala Lumpur, has raised a $62.5 million Series B round led by Camber Partners, with participation from Endeavor Catalyst and existing investors. It last raised a Series A of 7 million in 2022. The company has grown to $35 million in annual recurring revenue (ARR), growing 169% year over year, with a 30% profit margin, he told TechCrunch.

Founder and CEO Gerardo Salandra, who worked at IBM and Google before joining Runtastic, a fitness tracking app sold to Adidas in 2015, founded Respond in Hong Kong in 2017 alongside Hassan Ahmed (CTO) and laroslav Kudritskiy (COO). The team moved the business to Malaysia two years later.

The platform helps medium to large B2C businesses to monetize customer conversations across multiple messaging channels including WhatsApp, Instagram, TikTok, Messenger, Line, Telegraph, WeChat, voice calls and web chat. It also uses AI agents to automatically handle multiple customer inquiries, qualifying leads and closing sales without human intervention.

Sandrandra described its main customers as “high-concept” businesses, where customers need to speak to someone before making a purchase, such as healthcare, automotive, retail, education and travel. “You don’t go to a website, put down your credit card, buy a car, talk to someone, ask a lot of questions,” he said. Its sweet spot is companies with 200 to 10,000 employees.

The rise of AI has raised an obvious question for platforms like Answer: Can tools like ChatGPT simply replace what they’ve built?

Sandra thinks her foot is strong enough to stop that intrusion, should it happen. The company currently processes two billion text messages per quarter.

“Just looking at the numbers, every day AI is becoming more dominant, we’re growing faster,” he told TechCrunch. “We’re not seeing what the public SaaS markets are seeing.”

Part of that comes down to pricing, he said. Unlike business software competitors that charge per seat, Answer charges based on the volume of customer conversations, meaning it doesn’t matter if it’s a human or AI answering. “If fewer people use your product, they make less money,” he said. “But we don’t charge like that.”

Existing forums, especially those prominent in North America and Europe, are built around emails and phone calls. “The platforms that exist, they focus on sending messages as a second thought. They are very focused on email, they are very focused on calling, but when it comes to messaging, it is an afterthought,” said Sandrara.

That volume of message data creates a feedback loop, according to the CEO. More messages means better AI. Better AI attracts more customers. More customers generate more messages. “This is what we call the data flywheel,” said Sandrara. He added that a head start is important for any AI startup, too. “Because we started a long time ago and have a strong foundation, we can provide better AI compared to a newcomer in the messaging space.”

With the new capital, Sandrara said the company plans to pursue hiring, organic growth and acquisitions. CEO has two types of acquisition targets: bolt-on technology that complements its existing ecosystem, and established teams with strong customer bases in strategic markets such as Europe and North America. “Imagine how many months I could save if I found the right company that might have clients and a team,” he said. “I can save six months to a year by shopping.” He confirmed that the company is already negotiating with some potential targets.

A geographic push makes strategic sense. Responsiveness currently generates about 30% of revenue in APAC, 30% from Latin America, and 20% from the Middle East and Africa, leaving North America and Western Europe at only 20%. But Sandrara says those districts are now growing rapidly. “They took a long time to make this transition, but now they are moving very quickly to messaging channels,” he said, adding that he expects both regions to be a large part of the company in two to three years.

Without a new cash injection, Sandrar is wary of what’s next. “We don’t want to be a growing company at all,” he said. “Even with this money, we will behave appropriately.” But Sandra has bigger plans in mind. “My favorite result?” he said. “Ring the bell at Nasdaq.”