Customer Service Software - Past, Present and (future in progress)!

According to the Report on the Customer Service Software market, over $4.3B has been invested into the sector since 2005, with Accel Partners, Sequoia Capital and NEA being among the sector’s most active investors. The report covers companies which provide software and platform enabled customer services during and after the purchase of products and services for both B2B and B2C organizations.

Funding volumes during the last three years have been relatively high, with the timeframe between 2013-2015 witnessing a total ~2.2B being raised.

The report finds that funding across 2015 and 2016 YTD amounted to ~$1B, in 613 rounds with 302 companies getting investments till date. 2016 till date has already seen a few large volume deals amounting to a total of $262M,  with Fuze raising $112M in a round led by Summit Partners. Sprout Social also witnessed a Series C $42M raise in a funding round led by Goldman Sachs, during the month of February.

In fact, funding volumes during the last three years have been relatively high, with the timeframe between 2013-2015 witnessing a total ~2.2B being raised. The year-on-year funding and number of funding rounds both saw a steep increase during 2011- 2013 and has since remained almost constant. 2015, alone, witnessed a total funding of $752M being invested through 95 deals. Notable rounds during the year include Medallia’s $150M fund continuing from Sequoia Capital, which contributed majorly to the year’s overall funding volume. And with 2016 already continuing to follow this trend, we can expect funding during this year to maintain the sector’s momentum.

Early stage deals has played a major role in fuelling the sector, especially with the number of such deals peaking in the 2010-2012 timeframe, due to the emergence of many incubators and accelerators in 2010. Since that period, the sector has continued to see a stable flow of early stage deals.

Late stage deals, however, have begun to really make a mark especially post 2012, wherein we are beginning to see an upward trend in their number. This increase in late stage rounds has thereby helped the funding volumes touch the relatively high figures it has during the last three years.

Along with an increase in the late stage rounds, we are also witnessing an upward trend in the number of acquisitions taking place in the space over the last 6 years.

In fact, out of the 780 companies in the space, 65 have been acquired. 2015 saw a peak in this regard as well with 19 acquisitions, notably newBrandAnalytics and GetSatisfaction acquisition by Sprinklr, and Telligent getting acquired by Verint . In 2016, Nexidia got acquired by Nice Systems for $135M.

Also, with money continuing to be pumped into the sector, it is not surprising to see an upward trend in the number of companies being founded in the Customer Service Software space, with 2015 seeing a peak.

Over 240 companies were founded in the last two years alone, out of which 2015 accounted for 127. There has been increasing trend in the number of companies founded in the mobile enterprise and enablers apps segment. Of late, an emergence of companies adopting mobile first approach for customer support, has been evident with 40 of the 127 companies founded in 2015 coming out of this segment.

In terms of geographical presence, the U.S. contributes for 50% of the startups in the space. Europe contains the next highest number of companies`at 27%. UK, India and Canada are upcoming geographies holding 8%, 10% and 5% of the total companies in the Customer Service Software space.

In terms of segments, startups in the Call Center space have raised the most funding, at $1.5B. Within the segment, the Contact Center Suite sub-segment is the most funded and mature sub-segment, and the average funding per company is the highest for suite providers($19.6M) followed by Virtual Agents($17.27M). Call Center software and applications saw 9 acquisitions in 2015 and 2016 YTD. We may see consolidation in call center technology in coming years.

Today, there is an increasing trend in number of companies trying to build tools for automating customer service across all channels using AI and cognitive learning technologies. We are also seeing an increasing number of companies collaborating with IBM Watson and companies building their own virtual agents solutions.

Over the next few years, startups building tools to automate support over call, text, live chat on various interaction places will see major investments and acquisitions.

Note: This report covers companies which provide software and platform enabled customer services during and after the purchase of products or services for both B2C and B2B organizations. It also include companies which provide self service software which includes customer centric communities(web and social) and knowledge management tools for customer service reps and external customers. It also cover companies which provides software to capture customer feedback across all interaction channels to improve customer experience and brand loyalty.

This report does not cover companies which provides:

• Collaboration solutions for internal employee collaboration and networking.
• Social media management and monitoring used for marketing and PR activities.
• Infrastructure for call centers, or VOIP providers, business phone systems, telephony applications.
• Call center software for sales, marketing and telesales activities.
• Website and mobile based marketing solutions for customer engagement.

By - Deepanshu Gupta

Source : Tracxn Blog

For access to full report,  write to [email protected]