In 2017, Reply.io set out to solve a simple problem: businesses couldn’t keep up with customers who had moved to messaging apps. Today Respond, with its customer conversation management software, has become one of Malaysia’s technology success stories.
The Kuala Lumpur-based startup has raised a $62.5 million Series B round led by Camber Partners, with participation from Endeavor Catalyst and existing investors. He got up for the last time a Series A of 7 million dollars 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 tells TechCrunch.
Co-founder and CEO Gerardo Salandra, who worked at IBM and Google before joining Runtastica fitness tracking app that was sold to Adidas in 2015, he founded Respond in Hong Kong in 2017 along with Hassan Ahmed (CTO) and Laroslav Kudritskiy (COO). The team moved the company to Malaysia two years later.
The platform helps medium and large B2C businesses generate revenue from conversations with customers across multiple messaging channels, including WhatsApp, Instagram, TikTok, Messenger, Line, Telegram, WeChat, voice calls, and web chat. It also uses AI agents to automatically handle large volumes of customer inquiries, qualify leads, and close sales without human intervention.
Salandra described his core customers as “high consideration” businesses, where customers need to talk to someone before purchasing, such as healthcare, automotive, retail, education and travel. “You don’t go to a website, put in your credit card and buy a car; you chat with someone, ask a lot of questions,” he said. Its optimal point is companies with between 200 and 10,000 employees.
The rise of AI has raised an obvious question for platforms like Respond: can tools like ChatGPT simply replace what they’ve created?
Salandra believes his foothold is strong enough to stop that invasion, should it occur. The company currently processes 2 billion messages per quarter.
“If I just look at the numbers, every day that AI becomes more prominent, we grow 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 enterprise software competitors who charge by the seat, Respond charges based on the volume of customer conversations, meaning it doesn’t matter whether a human or AI responds. “When fewer people use your product, they make less money,” he said. “But we don’t get paid like that.”
Existing platforms, particularly those dominant in North America and Europe, were built around email and phone calls. “The platforms that exist, they focused on messaging as a second thought. They’re very email-focused, they’re very calling-focused, but when it comes to messaging, it’s an afterthought,” Salandra said.
That volume of message data creates a feedback loop, according to the CEO. More messages mean better AI. Better AI attracts more customers. More customers generate more messages. “This is what we call the data flywheel,” Salandra said. He added that the head start is also important for any emerging AI company. “Because we started so long ago and have such a strong foundation, we can offer better AI compared to someone who just entered the messaging space.”
With the new capital, Salandra said the company plans to pursue hiring, organic growth and acquisitions. The CEO has two types of buying objectives in mind: integrated technology that fits into its existing ecosystem and established teams with strong customer bases in strategic markets such as Europe and North America. “Imagine how many months I can save if I find the right company that may already have the clients and the team,” he said. “I can save between six months and a year with an acquisition.” He confirmed that the company is already in talks with a couple of potential targets.
The geographic push makes strategic sense. Currently, Respond generates approximately 30% of its revenue in APAC, 30% in Latin America, and 20% in the Middle East and Africa, leaving North America and Western Europe with just 20%. But Salandra says those regions are now the fastest growing. “They took longer to make the switch, but now they are moving very quickly into messaging channels,” he said, adding that he expects both regions to become the company’s largest segment within two to three years.
Despite the new injection of capital, Salandra is cautious about what will come next. “We don’t want to be a company that grows at all costs,” he said. “Even with this money, we are going to be very disciplined.” But Salandra has bigger plans in mind. “My favorite result?” said. “Ringing the bell at Nasdaq”.
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