Rasa lands $30M to supercharge customer service with generative AI assistants

San Francisco-based Rasa, a startup working to streamline enterprise customer service with generative AI, has raised $30 million in a series C round of funding, co-led by StepStone Group and PayPal Ventures. Andreessen Horowitz (a16z), Accel and Basis Set Ventures also participated in the funding round.

Rasa has seen steady growth with its technology over the last few years and roped in some known companies as customers, including Adobe, Orange, Dell and American Express. Now, with the fresh capital from the industry heavyweights, it plans to improve its product and expand its market share.

The timing of this development could not be better as enterprises across sectors are looking to tap the power of generative AI to transform different aspects of their business operations, including customer interactions. Bret Taylor, who is the director of the board at OpenAI, also recently launched a startup targeting the same space.

An open approach to conversational AI assistants

Back in 2016, when conversational AI was still in the early stages, Rasa, founded by Alex Weidauer and Alan Nichol, made waves with an open-source framework to build chat and voice assistants that understood multiple languages, business logic and intent. The offering provided the building blocks to bring naturally conversing assistants to life and is now being built into a full-blown enterprise-grade platform for generative conversational AI.

“Rasa’s first enterprise (platform) product was a UI that sat on top of the open-source product. With the release of Rasa Pro, an infrastructure offering, Rasa’s enterprise trajectory really accelerated,” Nichol, Rasa’s CTO, told VentureBeat. Nichol has authored multiple papers on the use of transformer architectures in natural language understanding and dialogue.

The Rasa Pro offering extends Rasa Open Source with CALM (conversational AI with language models), a generative AI-native approach to developing assistants, combined with enterprise-ready analytics, security and observability. It integrates with internal systems and also pairs with the no-code UI that allows anyone to collaborate on, build and improve the assistant.

“Since Rasa Studio is built on top of Rasa Pro, it’s deeply linked with… CALM (Conversational AI with Language Models). This empowers enterprise teams using Rasa Studio to build superior conversational customer experiences without a single line of code,” the company notes on its website.

Leading enterprises use Rasa

Given the open framework at the core, providing tools and infrastructure necessary for robust conversations, Rasa has drawn traction from major enterprises, including American Express, Deutsche Telecom, Adobe, Orange, Dell, Accenture and T-Mobile. The revenue of the company has almost doubled in the past year, Nichol said.

“Deutsche Telekom built their flagship customer-facing AI assistant ‘Frag Magenta’ with Rasa. Before Rasa, Deutsche Telekom was working with a competitor platform… and had reached the limits of what they were able to do on that platform. They came to Rasa for its power and sophistication, and the ability to customize how the AI works, unlike competitor solutions which are a black box (powered by proprietary, vendor-locked algorithms). The assistant has been recognized as the best chatbot in Germany for multiple years running,” Nichol said.

Enterprises working with Rasa in the banking and financial sectors have built assistants to help their end-users with tasks like managing accounts, sending money, checking balances and replacing cards.

Now, with this round of funding, which takes Rasa’s total capital raised to over $70 million, the company plans to invest in R&D and build up its enterprise-centric product – gaining a stronger foothold in the rapidly evolving AI agent market.

“We especially want to increase our investment in sales and marketing. We see that the market is ready for a next-generation conversational AI platform, and our existing customers confirm that what we’ve built is exactly that. So we want to bring our technology to as many people as possible,” Nichol said.

In the space of AI conversational assistants, Rasa is competing with multiple deep-pocketed players, including  Yellow AI, Aisera, Cognigy and Kore AI. Just yesterday, Bret Taylor, who is the director of the board at OpenAI, announced the launch of another player in the category — Sierra. This startup, although new, has already raised $110 million from notable venture capital firms and is racing to tap the power of large language models to enable enterprises to build always-available AI agents for their respective businesses. 

These agents, Sierra says, will understand jargon, typos and context in conversations and reply in the users’ language of choice with consideration and empathy, adapting to their specific needs and emotions. 

According to Markets and Markets, the conversational AI market was valued at $10.7 billion in 2023 and is expected to grow with a CAGR of over 22% to nearly $30 billion by 2028.