Stefanos Loukakos, a former director at Meta overseeing the business-oriented Messenger division and, for a brief time, part of the tech company’s blockchain initiative, observed years ago that online retailers were struggling to engage effectively with potential customers. He believed the core issue was that their marketing strategies were too generic. Retailers were distributing mass social media, text, and email campaigns that didn’t resonate with or convert potential buyers.
“Businesses need a way to craft effective messaging campaigns and automate interactions with both prospects and existing customers,” Loukakos stated. “The ideal solution would also provide personalized recommendations to help customers discover products they love, while giving businesses better insights into their audience.”
The idea crystallized when Loukakos met Yandong Liu, previously Strava’s CTO and a former researcher at Yahoo, through a shared connection in the entrepreneurial community. Their mutual interest in messaging-based marketing led them to co-found Connectly.ai in 2020. The company uses artificial intelligence to help businesses, particularly retailers and large e-commerce brands, sell products and services through any messaging platform. Loukakos explains that customers can “send and receive messages without worrying about hosting, managing, or maintaining software updates.”
Connectly’s platform integrates with various messaging tools — such as WhatsApp, Instagram, SMS, and website-based chatbots — allowing brands to create targeted ad campaigns and automate basic customer interactions. The AI, which is customized to fit a retailer’s product catalog and business preferences, connects with the company’s online store to send notifications about price updates, stock availability, and special promotions.
In addition, Connectly’s AI helps businesses identify which products interest customers most and automatically segments audiences. For instance, it can detect when a customer abandons their shopping cart on a brand’s site and then trigger a follow-up message with a discount or a lower-cost shipping option.
When asked about data privacy and transparency, Loukakos emphasized that Connectly’s bots always identify themselves clearly and that the platform is fully compliant with GDPR, allowing users to opt out of receiving messages from brands at any time.
But do people actually want to engage with businesses through chatbots? Some surveys suggest otherwise. A study commissioned by customer experience platform Callvu earlier this year found that most consumers prefer to wait for at least a minute to speak to a human agent rather than immediately engage with an AI.
However, many companies are adopting AI not primarily to enhance the customer experience, but to cut costs. Gartner predicts that contact centers will save up to $80 billion in labor costs through the wide deployment of AI in the next two years. Gartner also estimates that by 2026, 10% of customer service interactions will be automated as companies look for ways to operate with fewer resources.
Despite competition from startups and established players in conversational commerce, such as Attentive, Twilio, Infobip, Bird, Take Blip, and Yalo, Connectly’s technology has been embraced by a significant number of brands. Loukakos reports that the platform now has over 300 paying customers and anticipates 100% revenue growth in 2024, following a 5x increase last year.
While Loukakos didn’t disclose exact figures, given that Connectly’s revenue hit $3.5 million in 2023, it’s reasonable to assume the company is on track to generate $7 million by the end of this year.
Connectly continues to attract investor interest, even in the face of stiff competition. Alibaba, the Chinese retail giant, led a $20 million Series B funding round this week, pushing Connectly’s total funding to $37.2 million and giving the company a valuation of around $100 million.
Though Loukakos didn’t comment on whether Alibaba’s involvement could lead to future collaborations, he noted that their support is “hugely beneficial to Connectly’s growth.”
An Alibaba spokesperson stated, “We seek to partner with innovative companies that are breaking new ground in their industries, and Connectly is doing exactly that with its AI-powered conversational commerce solutions.”
Other investors, including Unusual Ventures, Volpe Capital, RX Ventures, and Falabella Ventures, also joined the Series B round. Loukakos added that the funds will be used to enhance Connectly’s platform and expand its San Francisco-based team from 65 to nearly 80 employees by the year’s end.