Zeals, a Tokyo-based startup that allows companies to communicate with their customers through its chat application, said Thursday that it has invested $27.2 million (3.5 billion yen) in equity and $11.6 million (1.5 billion yen). secured in debt. The latest round brings total funding to $41.4 million, the company said without disclosing its valuation.
JIC Venture Growth Investments led the Series E equity financing, 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 the debt financing.
Conversational commerce, a term coined in 2015 by former Uber employee Chris Messina, allows online businesses to sell their products and services through messaging and chat apps such as WhatsApp and Facebook Messenger. The coronavirus pandemic has made messaging apps the medium for personal, business or commercial interaction with each other.
According to a report from Juniper, the global conversational commerce market, also known as chat commerce or conversational marketing, is expected to grow to $290 billion by 2025, up from $41 billion in 2021, representing a 590% increase for the next four years, according to a report from Juniper Research. The research also shows that North Asian countries such as China, Japan and South Korea will account for more than 90% of chat trading spending by 2025.
Founded in 2014, Zeals currently serves more than 400 enterprises, including Toyota dealerships, Shiseido and NTT Docomo.
The company has grown at a compound annual growth rate of 139% in sales since 2017, Zeals CFO Yusuke Watanabe told MovieUpdates, but he didn’t provide a basis for that growth. Watanabe also said that Zeals’ average conversion rate is 9.6%, meaning that about 1 in 10 customers who use the Zeals chatbot service experience transactions.
Zeals co-founder and CEO Masahiro Shimizu pointed out that the startup has communications designers using its internal no-code bot builder to customize its service for users. Zeals focuses on promotions to enable its users to increase their revenue by attracting more customers, while other competitors mainly offer 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 MovieUpdates that before the COVID pandemic, the company had businesses in Taiwan, Thailand and the Philippines, but has temporarily withdrawn. Zeals is again in talks with a number of customers to move abroad again in Asia and the US, Shimizu added.