Decagon Eyes $100 Million Raise at $1.5 Billion Valuation
Decagon, an AI startup founded in 2023 by Jesse Zhang and Ashwin Sreenivas, is in discussions to secure $100 million in funding at a $1.5 billion valuation. The company specializes in building AI-powered customer support agents that manage routine tasks such as issuing refunds, canceling subscriptions, and answering product questions.
Clients using Decagon’s software include Notion, Duolingo, Bilt, Substack, and Rippling. According to Zhang, these AI agents can perform at levels equivalent to ten times a human employee, making them a strong asset for customer support teams looking to improve efficiency and reduce costs.
Winning Bake-Offs and Delivering Cost Savings
Decagon has gained attention by consistently outperforming competitors in "bake-offs"—head-to-head AI tool evaluations conducted by companies. One investor noted that Decagon often wins against Sierra, a newer rival led by former Salesforce co-CEO Bret Taylor.
Startups are adopting these AI agents to streamline customer service tasks previously handled by large outsourced teams. For example, Bilt reduced its customer support staff from hundreds of contractors to just 65 after implementing Decagon. Another client reportedly cut 80% of its support workforce.
ClassPass, handling over 2.5 million customer conversations with Decagon's AI agents, claims to have lowered its cost per reservation by 95%.
Funding and Technology Behind Decagon
The upcoming funding round is expected to be led by Andreessen Horowitz and Accel, involving existing investors as well. This round would increase Decagon’s total funding to $200 million, following a $65 million Series B round in October that valued the company at $650 million.
Decagon’s AI agents operate on large language models from OpenAI, Anthropic, and Cohere. These models are fine-tuned with company-specific data such as user manuals, how-to guides, and past customer service interactions. The company also uses a proprietary system to keep this training data updated and relevant, ensuring the AI remains accurate and effective.
Focus on Control, Transparency, and Voice Interaction
One of Decagon’s standout features is the control it offers businesses over how AI interacts with customers. Investor Elad Gil highlighted that clients can monitor, understand, and adjust AI behavior to ensure it aligns with their requirements.
Decagon is also working with ElevenLabs to develop voice-enabled agents that sound more natural, moving beyond typed chat to include spoken interactions.
Competition Heats Up: Salesforce Enters the Market
Decagon faces strong competition as Salesforce recently updated its AI platform with Agentforce 2dx. This update enables AI agents to operate behind the scenes, not just in chat windows, and includes low-code and pro-code development tools, real-time monitoring, and a developer edition for testing.
Salesforce also launched AgentExchange, a marketplace where developers and partners can monetize prebuilt AI actions, templates, and solutions. According to Adam Evans, Salesforce's EVP and GM of AI Platform, these tools make it easier for businesses to integrate AI into various workflows.
What This Means for Customer Support Teams
AI agents like those from Decagon offer customer support teams a way to handle high volumes of routine inquiries efficiently, reducing reliance on large support staffs. For those interested in learning how to incorporate AI tools in customer support workflows, exploring dedicated AI courses can provide practical skills to stay ahead.
For more on AI courses tailored to customer support roles, visit Complete AI Training.
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