As COVID refuses to become a part of history, the world continues to experience stressful and uncertain times, filled with cutbacks, highlighted by savings and fearful investors. Then comes along an Israeli startup and lands an insane mega-investment.
Gong, which developed an AI-powered system to optimize enterprise sales teams activity, announced a $200 million Series D mega-funding round, based on a company evaluation of $2.2 billion, yep with a B.
We haven’t even touched the money from the last round
Most times, a salesperson’s main tool, other than their phone, is a CRM system. This is where they enter every single collected piece of data relating to their customers, and hopeful that includes all the info collected from every sales call they make. However, in an interview with Geektime, Gong CEO and co-founder Amit Bendov claims that 99% of a sales call’ content is not documented into the CRM system, leaving the small percentage that is recorded, mostly irrelevant.
Gong’s system documents every call between a company and its customers, whether it’s a sales call, service call, technical support call, as well as recording the content across all the various channels of communication including email, chat, and others. Then, the system analyzes speech patterns, content and key insight from the interaction. This is then turned into actionable insight for the sales team to close more sales, reduce customer drop rates, and expand company market value. The system also provides salespeople a numerical probability for closing a potential sale, as well as alerting to sales that require management to take over.
The Coronavirus along with the following crisis has swept through the land, slowing down almost every global market. This should have created a challenging atmosphere for Gong, however, a bit of resiliency and innovative thinking added with a clear vision for the future has established the company on the positive side of the market chaos. When asked, Bendov claimed that a funding round wasn’t part of the company’s goals during COVID: “We weren’t concerned with funding during COVID, we were more focused on maintaining balance and making sure their our employees had purpose. Then July came along and things freed up, so we said we’d test the waters. We had no presentation, and we didn’t really give anyone an actual reason on why to invest in us.”
Nevertheless, Bendov notes that the company had received almost 20 offers within a few days. “I’m ashamed to say that it was easier than before COVID… Amazingly, the process went from ‘talking about the possibility of funding’ to money in the bank within 14 days. According to Bendov, the company never responded to all inquiring investors, as well as refusing another $800 million to continue working with the selected VC investors: Investment leader Coatue Management, Index Ventures, Salesforce Ventures, Thrive Capital. These are added to Gong’s already impressive investor list including Battery Ventures, Sequoia Capital, Norwest Venture Partners, NextWorld Capital, and Wing Venture Capital.
IPO on the horizon? “That’s not the goal, but a step in the right direction”
How do you explain the scenario where the market has slowed down but you still score such a massive funding?
Bendov: “It’s obvious. There’s still capital in the market. The money is just looking for big investments. Gong has the potential to be huge, a global leader. People see the potential in the investment. Invest big, so in a few years if we make it, the return is even bigger.”
The company reports that since its last funding round towards the end of 2019, it has tripled its revenue and its ARR is steady in the tens of millions of dollars. According to Bendov, the company has faith that it will hit hundreds of millions in ARR in the upcoming years. If that doesn’t sell you on the company’s stability than perhaps their impressive lineup of 1,100 customers will do the trick. Among them, we find market giants like PayPal, Autodesk, LinkedIn, Zillow, Slack, Shopify, and more.
What’s the next step? Go public?
Bendov: “I believe we’ll see an IPO, but that’s not our goal. It’s a step in the right direction. Amongst many expected steps. What will the market look like in 3 years? I have no idea. But I do know that our sales revenue will be 9 figure number.”
Exit? “If we get a $100 billion offer, maybe then we’d consider.”
The funds that entered the latest funding round are Late Stage funds, which according to Bendov prefer to get in prior to the IPO. When looking at Gong’s funding escapades, the company noticeably decides to fundraise when they can, rather than when they need to. Bendov claims that same like the last round, the company has yet to put all this cash to any use. “Cash allows you to buy companies and grow fast, and secure reserves for the tough times. As we know, our reality can change in the blink of an eye. At CEO school, they teach to fundraise when you can, not when you need. It’s always good to have some savings in the piggy bank.” At the same time, Bendov doesn’t cancel out another round before going public.
Among investors, we see Salesforce, which has already acquired a few Israeli companies, headlined by Datorama. So why not acquire you too?
Bendov: “They’re not in the mood to buy us, and we’re not in the mood to sell. There have never been any whispers on the subject. If we’d get a $100 billion offer, maybe we’d consider it. Although we see that our potential is way bigger than where we are at today. There are very few companies that have the capital to even float us an offer. We aim to go public as an independent company that can establish itself as a global leader. They’re a great partner to have as they have a lot to offer us, and we have just as much to give back to them.”
The figure, the evaluation, IPO plans and fancy words, for a second there this reminds us of WeWork, however, Bendov notes: “That’s something I have in the back of my mind all the time. We don’t really brag about the evaluation. We’re still taking our first steps… market evaluation is not how you measure success. We must prove ourselves. Our evaluation expresses investors’ expectations, which we need to meet.” Surprisingly, Bendov shows company run by humility, not blinded by silver platter: “We made it clear that it’s business as usual mentality here, nothing changes. This money is not intended for throwing out bonuses or bringing ice cream and massages. We build exactly what we were building prior to the money. We plan growth in sales, we hire top talent, and invest in communication with our workforce…”
Gong was founded in 2015 by CEO Amit Bendov and CPO Eilon Reshef, and has raised $334 million to date. The company employs 350 workers in offices in Israel and the U.S. Furthermore, over the next year Gong intends on adding about 100 new talented professionals to the up-and-coming company’s growing workforce.