Gupshup acquires VC-backed Active.ai; eyes $100-200 mn in pre-IPO round

MUMBAI: Conversational messaging platform Gupshup, operated by Webaroo Inc., has acquired conversational AI platform for banks and fintech companies Active.Ai, and is in talks with potential investors for a pre-IPO funding of $100 million to $200 million or even larger, a top executive told VCCirlce.

Beerud Sheth, co-founder and CEO, Gupshup, said the “mid-sized” acquisition involved mostly cash”. “We wanted the founders of Active.AI and employees to continue,” he added. Other institutional investors have exited in the process.

Founded in 2016 by Ravi Shankar, Shankar Narayanan and Parikshit Paspulati, Active.ai had raised funding from Kalaari Capital, Chiratae Ventures, Vertex Ventures, Creditease Holdings and Dream Incubator, among others.

Headquartered in Singapore, Active.Ai serves banking, financial BFSI customers across 43 countries with a Conversational Banking as a Service (CBaaS) platform that helps clients engage with millions of consumers.

“Gupshup and Active.Ai have a very high customer overlap as a lot of our banking customers use Acitve.ai for developing chat bots and so on,” noted Sheth, “So this acquisition accelerates our ability to do this specialised capability in the BFSI vertical which was part of our roadmap anyway."

This is Gupshup’s second acquisition in 2022. Earlier in February it acquired cloud telephony company Knowlarity Communications, which is backed investors such as Sequoia Capital and Mayfield.

In September last year, Gupshup bought New Jersey-based rich communications services (RCS) startup Dotgo.

Sheth said a couple of more acquisitions are in the pipeline without disclosing the details.

He also said Gupshup is in talks with potential investors to raise a pre-IPO funding round ahead of its US listing plans, which it has been vocal about for some time now. “The IPO if we are lucky could happen by even later this year or next year,” he said. The company will start “figuring out” bankers for the planned IPO by the middle of this year.

The company expects to raise $100 million to $200 million in primary funding as part of its pre-IPO round. “But if there's more demand, we'll see if some of our existing investors want to sell, and then we can do a secondary transaction as well like last year,” he added.

In April 2021, Gupshup raised primary funding of $100 million from Tiger Global. This funding round turned Gupshup into a unicorn, which are private companies that have a valuation of at least $1 billion. Few months down the line in July, Gupshup secured an additional $240 million in its Series F round of funding that also paved the way for exit of early investors.

Sheth underlined that the pre-IPO funding is not being done to fund its acquisitions or run its operations as it has adequate cash.

“It would be nice to do another round of funding before an IPO. That would be sort of an opportunity rather than a need because unlike many other companies we continue to grow and are profitable,” he added.

He also said existing investors are going to be supportive in terms of reinvesting in the future round but it is keen to get new investors on its cap table.

“We are looking to expand the base of investors and the right kind of investors would be sort of a long-term holder who will invest before and after an IPO as well. So, you want to get new names on the table,” he added.

Founded in 2004 as Webaroo Inc by Sheth and Rakesh Mathur, Gupshup pivoted from being an offline search engine to a business-to-business (b2b) customer engagement platform across SMS and other channels.

In its current form, Gupshup enables digital commerce businesses with conversational messaging across channels. On the customer-front, the conversational journey enables product discovery, payment, delivery tracking, feedback and support among other features.