Latest Funding Round Values Start-Up Sierra AI At $4.5bn

Artificial intelligence (AI) start-up Sierra has more than quadrupled its valuation to $4.5 billion (£3.5bn) in a new funding round, as investors bet on the generative AI sector and co-founder Bret Taylor, formerly the co-chief executive of Salesforce.

The company, which had its public launch earlier this year, was valued at nearly $1bn in January in a $110m round from Sequoia Capital and Benchmark.

In the latest round Sierra raised $175m from investors led by Greenoaks Capital, with Thrive Capital and Iconiq also participating.

The funding distinguishes Sierra as one of the most highly valued start-ups in the crowded field of generative AI, even as some fear the sector has turned into a bubble.

‘Empathy’

ChatGPT developer OpenAI recently concluded a $6.6bn funding round that values the company at $157bn, making it one of the most valuable firms in the world, an unprecedented bet for a company still in its start-up phase.

Founded a year ago, Sierra sells AI-powered customer service agents to enterprises, with customers including security company ADT, Sonos, WeightWatchers and Sirius XM.

The company says its tools are more empathetic and conversational than standard bots, reportedly banning the word “chatbot” from its San Francisco headquarters.

Its agents can be customised to suit the company’s brand, from a more sarcastic tone used by youth-oriented clothing firm Chubbies to a more serious tone for luxury brands.

Its technology uses one model to do the front-end work, with a second model as a backup to check the other one and help with accuracy, an arrangement intended to reduce “hallucinations” or false information, making the AI more trustworthy as a “brand ambassador”.

AI agents

The technology relies on large language models (LLMs) from OpenAI, Anthropic, Meta and others.

Taylor came to prominence as the co-chief of Salesforce and oversaw the board of Twitter during its takeover by Elon Musk.

He is also chairman of the board of OpenAI, and has downplayed competition between it and Sierra.

Co-founder Clay Bavor joined Google in 2005 and held significant roles, including managing Gmail and Google Drive.

Salesforce and OpenAI backer Microsoft are amongst the companies competing in the AI agent space, as well as start-ups such as Cursor and Harvey, which makes legal agents.

One in three dollars in venture capital funding this year has gone to AI start-ups, according to CB Insights.