Zeals, a Tokyo-based startup that lets businesses communicate with their customers via its chat application, said Thursday it has secured $27.2 million (3.5 billion yen) in equity and $11.6 million (1.5 billion yen) in debt. The latest round brings its total funding raised to $41.4 million, the company said without disclosing its valuation.
JIC Venture Growth Investments led the Series E equity funding, with participation from Z Venture Capital, a venture investment arm of Z Holdings, Japan Post Capital and Salesforce Ventures. Mizuho Bank and Mitsubishi UFJ Financial Group also joined in its debt financing.
Conversational commerce, a term coined by former Uber employee Chris Messina in 2015, enables online businesses to sell their products and services through messaging and chat apps like WhatsApp and Facebook Messenger. The coronavirus pandemic has fueled messaging apps to be the medium for personal, business or commerce to interact with each other.
The global market of conversational commerce, also known as chat commerce or conversational marketing, is expected to increase to $290 billion by 2025, up from $41 billion in 2021, representing a 590% rise for the next four years, according to a report by Juniper Research. The research also shows that North Asian countries such as China, Japan and South Korea would account for more than 90% of chat commerce spending by 2025.
Founded in 2014, Zeals currently serves more than 400 enterprises, including Toyota dealerships, Shiseido and NTT Docomo.
Its business has grown at a compound annual growth rate of 139% in revenue since 2017, Zeals CFO Yusuke Watanabe told TechCrunch, but he did not provide a baseline for that growth. Watanabe also said that Zeals’ average conversion ratio stands at 9.6%, meaning that roughly 1 out of 10 customers who use the Zeals chatbot service experience transactions.
Co-founder and CEO of Zeals Masahiro Shimizu pointed out that the startup has communication designers using its internal no-code bot builder to customize its service for users. Zeals focuses on promotions to enable its users to increase revenue by attracting more customers while other competitors offer mainly customer support services, Shimizu added.
The latest round will help Zeals accelerate new product development, diversify go-to-market channels and support overseas expansion. Shimizu told TechCrunch that the company had businesses in Taiwan, Thailand and the Philippines before the COVID pandemic but has temporarily pulled back. Zeals is in talks again with a number of clients to re-enter overseas in Asia and the U.S., Shimizu added.
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