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Raghu Ravinutala, co-founder and CEO of Yellow Messenger. (Photo: Mint)
Raghu Ravinutala, co-founder and CEO of Yellow Messenger. (Photo: Mint)

AI startup Yellow Messenger raises $20 million funding

  • Lightspeed India Partners led Yellow Messenger’s series A funding round of $4 million less than a year ago
  • Yellow Messenger had already made a foray into Southeast Asia, with its AI bots chatting in multiple languages

Bengaluru-based startup Yellow Messenger has announced a $20 million series B round of funding to push adoption of its conversational Artificial Intelligence (AI) platform in a landscape where enterprise-grade chatbots are more in demand than ever before.

“Right from the onset of Covid-19, a lot of enterprises were anticipating a disruption in customer and employee engagement. We saw a spurt in the volume of deals as there was a rush to automate these services. In fact, March was our best month in terms of the business we closed," Raghu Ravinutala, co-founder and chief executive of Yellow Messenger, told Mint.

Lightspeed India Partners led Yellow Messenger’s series A funding round of $4 million less than a year ago. The current $20 million series B round comes mainly from Lightspeed’s US fund at four to five times the startup’s previous valuation, according to Ravinutala. So it’s much more than an extension of the earlier investment—this is a bigger play for rapid expansion into new markets.

The American VC firm has been behind a number of global enterprise software success stories such as Nutanix, AppDynamics, and MuleSoft. Earlier this week, Lightspeed Venture Partners announced the closure of a new mega-fund of $4.2 billion. A part of this is being deployed to double down on its international portfolio.

Yellow Messenger had already made a foray into Southeast Asia, with its AI bots chatting in multiple languages. The series B funding will enable it to push more aggressively into Europe, Latin America and the US. “We anticipate demand for the company’s platform to accelerate as consumer expectations of real-time conversations with their brands deepen," says Amy Wu, Partner, Lightspeed Venture Partners.

Yellow Messenger has already built a track record with over 100 enterprise clients, integrating with their back-end systems to power 30 million conversations monthly on multiple channels like WhatsApp, Slack and telephony. Partnerships with Microsoft and Accenture have also enabled it to plug into large digital transformation projects for organizations.

At the same time, Ravinutala is mindful of the uncertainty around Covid-19’s impact on the economy. As a CEO, he has to do a balancing act between going after the growth potential in conversational AI and being ready for rainy days. “Even though we’re seeing good signs, nobody knows how this will end. So we’re conserving cash even though we have a strong balance sheet after this funding."

(Sumit Chakraberty is a Consulting Editor with Mint. Write to him at chakraberty@gmail.com.)

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