Sierra Technologies Raises USD 175 M at USD 4.5 B Valuation

Highlights:

• The startup’s technology is based on a conversational AI model that enables it to interact with customers through natural language conversations.
• In addition to its agentic AI capabilities, Sierra stands out by allowing customers to customize their customer service bots.

Recently, a rapidly growing AI startup co-founded by former Salesforce co-CEO Bret Taylor, Sierra Technologies Inc., has raised USD 175 million in funding, raising its valuation to USD 4.5 billion.

The funding round, led by Greenoaks Capital with participation from Thrive Capital and Iconiq, confirms a recent report by trusted sources that the company had been in discussions with investors.

Sierra is an AI startup that assists companies like WeightWatchers International Inc., audio equipment maker Sonos Inc., and home security provider ADT Inc. in deploying proactive virtual assistants for customer service functions.

Sierra’s technology is based on a conversational AI model that enables it to have natural language interactions with customers. Additionally, it can “see” and interpret a company’s internal business data, allowing its AI agents to be contextually aware of how they can address customer issues. For example, if a customer asks about store hours, location, or needs assistance with returning an item, the AI can access the company’s knowledge base to provide accurate responses.

Sierra’s chatbots can take action on behalf of customers, minimizing the need to transfer calls to human agents for resolution.

In addition to its agentic AI capabilities, Sierra sets itself apart by allowing customers to personalize their customer service bots. For example, the clothing brand Chubbies Inc. chose to create a youthful and trendy agent named Duncan Smothers, who has a slightly sarcastic tone. In contrast, other brands have selected AI agents with British accents and a more serious demeanor.

In an interview with CNBC, Taylor explained that the goal of this level of personalization is for conversational AI agents to not only assist companies but also serve as brand ambassadors. “It’s actually something that represents a statement of your values. So do you want to be sarcastic? Do you want to use emoji? Do you want it to sound like text messaging, or do you want it to sound like a lawyer?” he explained.

Another factor that distinguishes Sierra from its competitors is its use of a “constellation” of well-known large language models. While it primarily relies on one model for the bulk of the work, the company acknowledges that no single LLM can guarantee 100% reliability and accuracy. Therefore, it employs secondary models as a sort of “backup” to monitor the primary model’s accuracy and provide assistance when needed. Although Sierra did not disclose the specific models it utilizes, it mentioned that they include LLMs from OpenAI, Anthropic PBC, and Meta Platforms Inc., among others.

Taylor, who previously co-led Salesforce alongside co-founder Marc Benioff and acted as chairman of Twitter Inc. during Elon Musk’s acquisition attempts, is one of Silicon Valley’s most prominent entrepreneurs with a long-standing interest in AI technology. He is reported to have participated in several AI initiatives while at Salesforce and currently serves on the board of directors at OpenAI.

Before joining Salesforce, Taylor played a significant role at Google LLC, where he was instrumental in developing Google Maps. It was during this period that he met Sierra’s other Co-founder, Clay Bavor, who led the company’s virtual reality initiatives.

Before the recent funding round, Sierra had raised USD 110 million from Sequoia Capital and Benchmark, achieving a valuation of nearly USD 1 billion.

With this latest funding round, Sierra positions itself among a growing number of highly funded AI startups that continue to attract billions in venture capital despite rising concerns about potential AI bubbles. Recently, OpenAI raised USD 6.6 billion, achieving a valuation of USD 157 billion, while Perplexity AI Inc. is reportedly in discussions for a potential USD 500 million raise that would elevate its valuation to over USD 9 billion.

The valuations of early-stage startups typically hinge on their growth potential as well as the skills and reputation of their founding team. According to sources, Sierra’s annual recurring revenue has already surpassed the USD 20 million mark.