Artificial intelligence startup Sierra is raising nearly $1 billion in a new funding round, CNBC has learned, as venture capital investors look for winners in an ongoing deal.
The San Francisco-based company brought in $950 million of fresh capital led by Tiger Global and Google’s GV at a $15.8 billion post-money valuation. Benchmark, Sequoia, GreenOaks and other existing investors also participated.
The startup was founded three years ago by OpenAI president and former sales force Co-CEO Brett Taylor, with former Google Executive Clay Beaver. Taylor was also the Chief Technology Officer Facebookand chairman of Twitter when Elon Musk purchased the social media network. Sierra’s founders met at Google, where Taylor was credited with helping create Google Maps and Bavor led virtual reality efforts and Google Labs.
Sierra sells AI to customer service agents and is positioning itself as a leader in a new class of software companies built on top of OpenAI and Anthropic’s foundational models. According to Taylor, the company leverages its own well-established proprietary layers as well as a “cluster of models.”
According to the company, Sierra topped $150 million in annual recurring revenue, or ARR, in eight quarters. The development timelines are unprecedented in traditional software and highlight the “intense demand in the market,” Taylor said.
“There’s a really big addressable market and immediate opportunity out there,” Taylor said. “We’ve digitalized the last remaining analog channel, which is the telephone line – it’s a better experience. You don’t have to wait on hold. These agents are naturally multilingual.”
Taylor estimates that $400 billion is spent annually on customer service. A big part of that is going to AI agents, he said.
AI competition
The funding round is the latest deal in the hottest space for investors. Deals of this size have come to define the recent venture landscape as investors are attracted to what they see as category leaders. There’s also appetite to back names beyond the giants like OpenAI and Anthropic, whose valuations are rising to $1 trillion.
Taylor described buzzy AI coding agent companies Cursors and replies are the largest segment of the market, followed by customer service agents. The new cash injection is meant to maintain its edge in an increasingly crowded space, he said.
“There’s a lot of competition out there. We’re several times larger than the next biggest and are trying to invest aggressively so we can continue to expand our lead,” Taylor said.
Sierra customers are mostly enterprises Prudential, cignaBlue Cross Blue Shield and rocket hostageAlso one of the three largest banks in the world. The startup serves more than 40 percent of the Fortune 50, Taylor said.
Benchmark’s general partner, Peter Fenton, was one of Sierra’s first investors and also participated in the Series E. He pointed to the startup’s revenue momentum and how long it took previous generations of software companies to reach the same milestones.
“It’s funny how quickly it happened.” Fenton said in an interview. “If measured by objective facts such as scale of revenue and quality of the customer base, Sierra is a winner every way in the ‘customer experience’ category.”
Fenton said the sheer size of this funding round will help Sierra maintain its lead.
According to Fenton, the startup is also able to incorporate and quickly court traditional companies that are not always as quick to adopt technology.
“You’re seeing some industries that have historically been slow to understand that a cautious, wait-and-see approach to AI is the path to extinction.”
As president of OpenAI, Taylor is at the center of the AI boom. He compares the current AI boom to the early days of the Internet, and says it will create a new generation of trillion-dollar titans. Still, he expects the market to improve within the next two years.
“When there is so much authentic enthusiasm about the market, you have a lot of capital and a lot of companies,” Taylor said, predicting a “crush effect” where capital dries up for everyone except the market leaders.
For Sierra, that means staying private for a while. Taylor said an IPO is “definitely in our future”, but sees being private as an advantage and buffer while they go through the growing pains of rapidly scaling.
