Remote Simultaneous Interpreting - What's Up With All the $

Remote Simultaneous Interpreting (or maybe "Virtual Meeting Interpreting") is hot with investors! They just poured more venture dollars into this sector than the sector generated in sales in its best year ever.

• Will the investors get their money back?
• And if yes, is there room for another investor to hop on the train with virtual meetings in multiple languages?

This week RSI platform Interactio announced a round of USD $30 million. This largest-ever round A in the Baltics closely follows a USD $21 million investment in the US platform KUDO just two months ago. Yet another round with a similar company is rumored but has not been announced officially yet. The total capital influx between all platforms in this field including Interprefy now exceeds $70 million. This is roughly double the total sales of all such platforms taken together in 2020.

Silicon Valley Valuations

RSI platforms were a small promising business before COVID, and it became the poster child of the language industry adapting to lockdowns. At the beginning of 2021, I teamed up with interpreting industry experts Natalya Fedorenkova and Naomi Bowman to investigate the impact of covid on the conference interpreting sector. We interviewed 15 software platforms on the vendor side and the chief interpreters in the UN, the European Commission and Parliament, World Bank, and other such organizations on the buy-side.

We found that the top three platforms that made it into the United Nations, EU, and other government/NGO interpreting setup made a killing over the last year. Interprefy, Interactio, and KUDO all grew x3-x7. They were closely followed by those others who were market-ready for big corporates in March 2020, including Voiceboxer and Olyusei. Most others we talked to missed the big wave due to unfinished products, the absence of sales teams, and the lack of connections in the right places. A product alone does not make a business.

KUDO and Interactio now got their investment at Silicon Valley valuations based on X times annual recurring revenue. Both of these companies are now valued at more than $100 million, even though they did not generate 10% of that in sales in 2020, and despite the fact that a significant part of this revenue is driven by services such as interpreting and meeting support, and not SaaS license fees. Investors were seduced by growth figures and bought a future rather than the present.

New Targets for Investment

The obvious target is Interprefy, the largest company in the sector according to our estimates. The game is on for them to make a countermove to offset the splash created by KUDO and Interactio. A shared pool of clients creates bitter competition for volumes, talent, and leadership in the sector between the top players.

The other options might include Voiceboxer, a Denmark-based provider that makes half of their business by licensing their software to conventional interpreting companies, and another half from direct corporate clients.

Ablio Conference in Italy employs a similar business model and according to a rumor they are looking for an investor. The downside is that agency clients are not as flash and they don't present the same opportunity as the United Nations as a client.

QuaQua is a platform by a Belgian company Duvall, that has been supplying the European institutions with equipment for interpreting, and has switched to supplying software since COVID hit. QuaQua's platform is a good product, it enjoys a high satisfaction score with professional interpreters.

Olyusei is a Madrid-based company with expertise in European Works Councils founded by language industry entrepreneur Marcos Aranda who already built a successful translation and interpreting business and expanded into software. A similar business in the US is InterpretCloud, created by serial entrepreneur David Utrilla.

In total, we have found about 50 RSI platforms, including the following: Akkadu, Catalava, Converso, Conference Rental Network, E-newie, Globenti, iBridgePeople, InterpreteX, Kunveno, SmartTerp, Rafiky, RSI Exchange, Speakus, TheSpeech, Tradu, Translit, VerbaVoice, Verspeak, I-Pie, and VMix. Moreover, many interpreters use Skype, WhatsApp, and other conventional apps for interpreting, even though simultaneous interpreting is not possible in this setup.

2x Growth Potential Now, and Low Ceiling for Long-Term

I estimate the addressable market for simultaneous conference interpreting at $1.1- 1.3 billion. It's a smaller part of the language industry, and platform companies captured only a few percent of that volume so far. The rest remains a fragmented market. Due to the low base number effect, top platforms can still double in 2021-2022, and that should be enough for the investors to get returns.

In the long term, I doubt the sector is big enough to make RSI platforms into Unicorn companies with billion-dollar valuations. Conference interpreting has been around for ages. Established companies in this field such as Presence in Europe and Atlas in the US grew to a few million dollars, but not to hundreds of millions as LanguageLine and Cyracom have in the consecutive interpreting area.

Platform RSI companies disrupt conference interpreting in a soft way, they basically replace receivers that need to be handed down to the participants, and they eliminate the need for interpreter travel. The price for human interpreting is stable, and the budget is reduced mostly because meetings are sliced into smaller chunks: billable hours instead of days. That is barely enough to trigger the Jevons paradox and increase the consumption of the product because its price has gone down.

Hundreds of small interpreted meetings of experts are the hope of every company in the space. Will these small meetings make a $1.1 bn market a $2 bn market by 2025?

Diversification

The top platforms have a big advantage: they are inside the procurement at the UN and the EU. The government and semi-public sector organizations institutionalize the use of platforms and ingrain them into their daily work despite resistance from older interpreters. From inside the system, RSI businesses can launch new services such as note-taking, or maybe machine interpreting one of these years, and continue to grow.

Competition from Zoom

63% interpreters (but not necessarily top interpreters) think Zoom is not bad

The big threat looming over virtual meeting interpreting companies is professional functionality for interpreting in conventional meeting platforms like Zoom, Teams, Google Meet, Webex, and so on. Having added basic interpreting features early at an unbeatable price of $65 per month, Zoom now powers more than 75% of online meetings with interpreting (*). Webex introduced interpreting in March 2021. Microsoft Teams are believed to be next up.

RSI platforms will always offer a little more in terms of professional features and meeting support services, so they add value to large buyers who are not price-sensitive. For small businesses and freelancers, where affordability is more important, the advancement of interpreting features in conventional meeting apps might mean that a Zoom license is just enough.

Zoom's revenue is already 3x the size of the conference interpreting market. It can eat up the opportunity in small meetings in one bite.

Note: * based on our survey of 500 interpreters and ESIT survey.