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AI customer-service startup Netomi raises $30 million

Netomi Inc., a provider of customer-service chatbots, said it has raised $30 million in a Series B funding round that values the company at $210 million, up from a valuation of $67.5 million in 2019.

Netomi customers use the company’s chatbots to automate customer-service conversations in venues including email, messaging and virtual assistants. The company is based in San Mateo, Calif., with additional offices in New York City and Gurugram, India.

Netomi works in an area known as conversational artificial intelligence, which aims to use natural-language processing to help chatbots and virtual assistants handle complex requests while sounding as human-like as possible.

The company plans to use the funds to open offices in London, Singapore, Toronto and Montreal. Netomi also plans to expand its marketing outreach and increase spending on research and development to improve its artificial-intelligence capabilities, said Puneet Mehta, chief executive of the company.

Netomi has built an operating system that uses artificial intelligence in three ways, Mr. Mehta said: It can help answer common customer questions, gather information about customers’ problems before sending users to customer-service agents, or quickly identify situations when customers need assistance from a human agent.

“I’m not trying to replicate human-to-human conversation and just do it with artificial intelligence in a suboptimal way,” Mr. Mehta said. “We are saying what superpowers does AI bring to the table in this case? And how do we completely reinvent that conversation?”

New investors include WndrCo LLC, a technology and media investment firm co-founded by Hollywood mogul Jeffrey Katzenberg. Existing investors that participated in the round include Eldridge Industries LLC and Fin Venture Capital. Netomi has raised a total of $52 million.

Customer service has become increasingly critical to companies’ business, Mr. Katzenberg said. “Customer experience now has a seat in the boardroom,” he said. “You no longer can brush this off to a call center issue—it is reputational.”

Many chatbots tend to disappoint customers because they still struggle to understand the complexities of human language, said David Truog, vice president and principal analyst at Forrester. But conversational artificial intelligence is still in its infancy, Mr. Truog said.

Netomi customers include Zinus Inc., a home-goods company that uses Netomi’s chatbot to automate about 87 types of tasks, including answering customers’ questions about where their orders are, said Reuben Magbanua, director of customer care at the company.

Zinus customers that have engaged with Zuri, the company’s chatbot, say that they wish it was smarter and had a more human-like tone, Mr. Magbanua added.

Mr. Mehta said Netomi’s automated customer-service agents aren’t designed to recreate human beings, drawing a comparison with the capabilities of autonomous cars.

“Self-driving cars do not analyze and handle driving situations exactly like human drivers,” Mr. Mehta said in an email. “Human drivers are having to work with vision and hearing, while a self-driving car could have several cameras facing all directions, distance sensors, data on road conditions and so much more.”

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