One month ago, AI-powered sales startup Gong had no intention of raising more money. The company, which gives sales insights via artificial intelligence that scans salespeoples’ emails and calls, had yet to spend the $65 million it raised last December and business was booming during the pandemic with revenue tripling in the first half of 2020. With sales reaching some $20 million last year, that puts Gong on track for better than $50 million in revenue this year.
But as investors approached Gong, it raised $200 million, closing the deal in just two weeks. The San Francisco-based company has now raised a total of $334 million, setting itself up for a hoped-for initial public offering within the next three years. “People want to get in ahead of an IPO of the company,” says CEO Amit Bendov, who previously ran business intelligence startup SiSense. Coatue led the Series D funding that takes Gong’s valuation to $2.2 billion from $750 million after its previous round. Additional investors in the new funding include Index Ventures, Salesforce Ventures, Thrive Capital and existing investors such as Sequoia and Battery.
Gong is a rising player in the sales software industry thanks to its use of natural language processing to analyze and take notes on all the conversations being had in emails, video conferences and phone calls. The software then crunches that data to provide insights such as analysis on which customers are ready to be pitched for a product update, which deals are at risk of being lost or what successful sales reps are doing to close deals.
Bendov, 55, founded the company with chief product officer Eilon Reshef, who previously cofounded cloud company WebCollege in 2015. Both Bendov and Reshef rose to prominence in the Israeli tech scene. Gong made the cut this year for both Forbes’ AI 50 and Next-Billion Dollar Startups lists; it is the second company from this year’s Next Billion-Dollar Startups list to cross the $1 billion valuation mark.
Investors were initially hesitant to invest in Gong, Bendov says, out of worries that salespeople would view the software as a form of Big Brother surveillance. The product proved popular, allowing the startup to expand its customer base to 1,300 companies including LinkedIn, PayPal and Slack. “When we started raising money, it wasn't a walk in the park; today, it’s super easy,” Bendov says.
While many companies have struggled during Covid-19, Gong has benefitted from salespeople being compelled to take their deals online. Bendov attributes the increased usage to scattered sales teams that are turning to a new centralized location to manage operations, and salespeople who are retraining themselves on how to build customer relationships without in-person meetings. “The world is so volatile,” he says. “Now is a terrible time not to know what's going on with your customers.”
The new funding will go towards expansion, especially to Europe, and to build out new features in its product. The company plans to hire 100 new employees by year end. The product vision is only “10-20% there,” Bendov adds, suggesting there is plenty more clerical work that Gong can shave away from salespeoples’ routines. The software’s baseline AI functionality—capturing words directly spoken by a customer, rather than indirectly via the sales rep—can someday apply to a market “way bigger than CRM,” Bendov says.
“Our hope is within two-and-a-half to three years to be at the revenue run rate and financial performance that will allow us to IPO,” he says.