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Consumers have made a big shift to using mobile phones as their primary, and often sole, telephone, but as they have done so, they\u2019ve also created something of a rift in the business world: many of the companies that count those consumers as customers are still using landlines \u2014 275 million businesses in the U.S. alone \u2014\u00a0resulting in a feature\u00a0gulf between how the two can communicate with\u00a0each other in real time: it\u2019s either a voice call, or nothing. However, a startup based out of Seattle is hoping to bridge that gap.<\/p>\n
Zipwhip, which has built a platform to let people with mobile phones send text messages to businesses that call them from landline phones, is today announcing that it has raised $9 million in funding. The Series B was led by local VC Voyager Capital, with participation also from strategic backers Microsoft Ventures, regional telecom GCI, and Inteliquent, an interconnection partner for communications service providers.<\/p>\n
The company is not disclosing its valuation with this round, or its revenues. At the beginning of this year, Zipwhip said<\/a> it saw annual growth of 356% in annual recurring revenue, with messaging traffic volume up 300%. It also said it was\u00a0adding\u00a0$400,000<\/span>\u00a0in ARR each month and expects to hit $10 million<\/span>\u00a0in ARR by third quarter 2016.<\/p>\n Zipwhip has been around since 2007, growing while raising modest amounts of capital, relatively speaking.\u00a0Prior to this round, the startup had raised only\u00a0$8 million<\/a>. In the meantime it has picked up a wide range of businesses as customers, focusing specifically on those that are consumer-facing and do a lot of business over the phone.<\/p>\n They include insurance agencies (there are over one thousand using Zipwhip including\u00a0Allstate, Farmers, and many\u00a0independents); car dealerships; the broadcaster CBS whose\u00a0radio stations are using Zipwhip; and staffing companies fitness gyms, dentists offices, veterinarians, title companies and credit unions.<\/p>\n Zipwhip\u2019s rise comes at an interesting point in the growth of mobile messaging apps.<\/p>\n A wave of companies built around messaging services for consumers \u2014 they include the likes of Twitter<\/a>, Facebook (both through\u00a0Messenger<\/a> and WhatsApp<\/a>) and WeChat<\/a>\u00a0\u2014\u00a0are eyeing up the opportunity to use their infrastructure and customer reach to help businesses communicate with customers better. However, these are predicated on customers already using those apps as communications channels to begin with, and being amenable to those channels getting appropriated for use as customer service platforms.<\/p>\n Zipwhip is approaching the idea of using messaging\u00a0as a B2C communications tool from a different end of the spectrum. It\u2019s not so much about\u00a0adding a customer care component to platforms where people are already using a lot of messaging services, but about offering messaging as an option for those who are using their mobile phones as their primary phone, and have a habit of wanting to respond to phone calls with text messages.<\/p>\n This happens a lot more than you might think: Zipwhip says in the U.S. alone,\u00a0there are around 150 million text messages sent to landlines daily<\/em>\u00a0\u2014 most of which, of course, are just disappearing into the ether because the landline owner doesn\u2019t have any way of capturing them.<\/p>\n What Zipwhip does is create a filter between a landline and a mobile phone. When a text\u00a0is sent from the mobile to the landline, Zipwhip\u2019s cloud-based software sees\u00a0it, and sends it to\u00a0an app that looks a bit like an email interface. There, a Zipwhip customer (say, the business) that owns the landline can then read those messages and respond to them as messages using the same interface. Essentially, Zipwhip\u2019s app gives a landline user a facility that has up to now been mainly a mobile phone and\u00a0messaging app feature.<\/p>\n Zipwhip is not the only one tackling this business opportunity. HeyWire<\/a>, a direct competitor that had raised more VC funding in its life, was acquired by Salesforce<\/a> in September of this year. It appears to be part of Salesforce\u2019s bigger strategy to tackle\u00a0messaging<\/a> as a more monetizable customer service frontier.<\/p>\n Yes, that\u00a0may mean\u00a0Zipwhip now has a formidable competitor, but it also\u00a0points to the fact that the startup is definitely working in an area of growing demand.<\/p>\n In that context, it\u2019s interesting to see Microsoft \u2014 a neighbor of Zipwhip\u2019s geographically speaking\u00a0\u2014 among the investors in this round. Microsoft\u00a0has shaped up parts of its\u00a0enterprise business<\/a> over the last several years to compete more directly against the likes of Salesforce (and likewise, Salesforce has also done the same<\/a>).<\/p>\n At the same time, Zipwhip is also looking at ways of applying its text-conversion technology in other areas.<\/p>\n Some of those new applications are a little tongue-in-cheek fun, like this robotic beer keg<\/a> that poured you a pint and zapped your phone number onto the side of\u00a0the cup when you texted \u201cBeer\u201d to a certain number.<\/p>\n More seriously, co-founder and CMO John Larson tells me that Zipwhip is \u201cdoing a big push for data integrations with major CRM players, i.e. Microsoft applications, Salesforce, and others,\u201d which would give it more parity with HeyWire.<\/p>\n He also says that the company is looking at securing the texting channel to make it usable for other purposes, like transactions.<\/p>\n \u201cWe\u00a0are working on [ways]\u00a0to support the equivalent of SSL certificates, but for business phone numbers, so that you as a consumer know you\u2019re texting with a legit business,\u201d he said. \u201cWe see that being a huge opportunity, and a natural next step in driving payment transactions over text messaging in the U.S., just like WeChat did in China. They\u2019re now doing over $500 billion per year in transactions over messaging.\u201d<\/p>\n Another big area of opportunity is the growth of new kinds of ad units, where\u00a0users are able to click on ads to send a text<\/a>\u00a0(Google is among those testing this<\/a>)\u00a0another area that Larson said its tech could be used to run and interact with such services.<\/p>\n