Zipwhip Gets $51.5M for Software That Lets Businesses Text Customers

Texting has grown well beyond person-to-person communications. To remind customers about upcoming appointments or notify diners their restaurant tables are ready, for example, text messages have in many businesses replaced phone calls and light-up buzzer systems.

But text-based communications between businesses and their customers are becoming more of a two-way dialogue, with organizations increasingly allowing people to send them texts to do things like schedule appointments and place orders—messages that go to a business’s landline number. One company that has helped facilitate this shift is Seattle-based Zipwhip, which has developed cloud-based software allowing clients to conduct more of their customer communications via text message instead of by phone or e-mail.

On Friday, Zipwhip announced it has raised $51.5 million in new funding. Goldman Sachs led the round, and other participating investors included return backers OpenView, Voyager Capital, and M12.

Launched in 2007, Zipwhip has worked with its clients to “text-enable” about 3.3 million business phone numbers in the United States. John Lauer, co-founder and CEO of Zipwhip, says his startup is focused on continuing to increase that figure, and the new funding will help fuel those efforts.

“There’s more than 200 million business phone numbers in the U.S.,” he says. “We have a really long way to go.”

Lauer declined to reveal the valuation Zipwhip received as part of the Series D funding round, or share revenue figures. However, he says Zipwhip’s total sales in 2018 were up more than 80 percent over the previous year.

Zipwhip now has more than 260 employees and more than 10,000 organizations use the startup’s software, Lauer says.

The messages Zipwhip’s clients send to their customers use the short messaging service (SMS) standard. The standard’s openness—at least when compared to some other formats, like Apple’s iMessage and Facebook Messenger—is one reason Zipwhip has long been bullish on the longevity of SMS-based exchanges. (The startup’s clients are able to send texts using both the desktop and mobile versions of Zipwhip’s software.)

Even in its early years, Zipwhip saw opportunity in being able to text a landline; Lauer said as much to Xconomy in a 2012 profile of the company.

However, until recently, businesses did not have a way of configuring their landline phones to be able to receive text messages.

“Only mobile phones had the ability to text” until 2014, Lauer says. He views the work mobile carriers, Zipwhip, and others did around that time to make it possible to text-enable a landline as “the big disruption” that helped set the course Zipwhip has been charting in recent years.

Users of the startup’s software can attach photos and other media to messages, Lauer says. Zipwhip’s digital tools have the ability to interface with other programs, such as customer relationship management applications.

From the recipient’s perspective, there’s no way of telling that a message originated from Zipwhip’s software, Lauer says; it looks like any other text. Customers who experience notification fatigue can request that an organization stop texting them, similar to hitting the unsubscribe button in an email, he says.

More companies are using chatbots and other tools to let people visiting their websites request information or assistance. Lauer says that as a result, consumers are now more comfortable entering into a dialogue without knowing the identity of the person on the other end.

That appears to be a welcome trend for Zipwhip. For example, Lauer says, a dental office that uses Zipwhip’s software may notify a patient its records indicate he or she is overdue for a cleaning.

“Your dentist texts you, and you just naturally reply back,” he says. “You end up in a conversation with the person at the front desk. You don’t really think about it, and almost take it for granted that it’s working perfectly.”

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