Sierra Technologies Inc., a hot artificial intelligence startup co-founded by ex-Salesforce Inc. co-Chief Executive Bret Taylor, said today it has closed on a $175 million funding round that brings its valuation to $4.5 billion.

The round was led by Greenoaks Capital and saw participation from Thrive Capital and Iconiq, and confirms a report earlier this month by The Information, which said the company was engaged in talks with investors.

Sierra is an AI startup that helps enterprises such as WeightWatchers International Inc., the audio equipment company Sonos Inc. and the home security firm ADT Inc. implement proactive virtual assistants for customer service roles.

The startup’s technology is built on a conversational AI model that allows it to engage in natural language conversations with customers. It also has the ability to “see” and understand a company’s own business data, enabling its AI agents to be contextually aware of the ways they might be able to solve customer’s issues. For instance, if a caller wants to know what time a store is open, or asks where it’s located, or requests a ticket to return an item, it can delve into the company’s knowledge base to find the answers.

By taking actions on behalf of customers, Sierra’s chatbots can reduce the instances in which calls have to be handed off to a real human agent to be solved.

Besides its agentic AI capabilities, Sierra also differentiates itself through the way customers can personalize their customer service bots. For instance, the clothing company Chubbies Inc. opted to create a young and hip-sounding agent with the slightly sarcastic name Duncan Smothers. Meanwhile, some other brands have opted for AI agents with British accents and a more serious tone.

In an interview with CNBC, Taylor said the idea with this level of personalization is that conversational AI agents should not only help companies but also act as a kind of brand ambassador. “It’s actually something that represents a statement of your values,” he explained. “So do you want to be sarcastic? Do you want to use emoji? Do you want it to sound like text messaging, or do you want it to sound like a lawyer?”

Another thing that sets Sierra apart from its competitors is its reliance on a “constellation” of well-known large language models. Though it primarily uses one model to do the heavy lifting, there’s an expectation that no single LLM is 100% reliable and accurate. So it uses secondary models as a kind of “backup,” in order to monitor the accuracy of the first and help when necessary. Sierra didn’t specify the exact models it uses but said they include LLMs from OpenAI, Anthropic PBC and Meta Platforms Inc., among others.

Taylor, who previously ran Salesforce alongside its co-founder Marc Benioff and served as chairman of Twitter Inc. when Elon Musk was attempting to buy that company, is one of the best-known entrepreneurs in Silicon Valley, and has a long held interest in AI technology. He is said to have been involved in a number of AI initiatives during his time at Salesforce, and also sits on the board of directors at OpenAI.

Prior to Salesforce, Taylor held a key role at Google LLC, where he was heavily involved in the creation of Google Maps. It was during this time that he met Sierra’s other co-founder Clay Bavor, who headed up the virtual reality efforts at Google.

Prior to today’s round, Sierra had previously raised $110 million in funding from Sequoia Capital and Benchmark at a valuation of nearly $1 billion.

With the latest round, Sierra establishes itself among a growing number of extremely well-funded AI startups, which continue to rake in billions of dollars in venture capital money despite growing concerns about AI bubbles. OpenAI recently raised $6.6 billion at a valuation of $157 billion, while Perplexity AI Inc. is reportedly holding talks over a possible $500 million raise that would bring its value to over $9 billion.

The valuations of early-stage startups are usually based on their growth potential and the skill and reputation of their founding team. Sierra’s annual recurring revenue has already crossed the $20 million barrier, Reuters reported.

Photo: Sierra