On the heels of Facebook taking a big step into customer service with the acquisition of Kustomer for $1 billion, another big move is afoot in the world of customer relationship management and engagement. Sinch, a Swedish company that provides cloud-based “omnichannel” voice, video and messaging services to help enterprises communicate with customers, has announced that SoftBank is taking a $690 million stake in the company. Sinch said that it plans to use the proceeds of the share sale for M&A of its own.
“We see clearly how our cloud-based platform helps businesses leverage mobile technology to reinvent their customer experience,” Oscar Werner, Sinch CEO, told TechCrunch. “Whereas people throughout the world have embraced mobile messaging to interact with friends and family, most businesses have yet to seize this opportunity. We are establishing Sinch as a leader in a global growth market that is still very fragmented, and we’re excited that SoftBank is now helping us realize that vision.”
Specifically, Sinch has issued and sold 3,187,736 shares worth SEK 3.3 billion, and large shareholders have sold a further 5,200,000 shares — with SoftBank the sole buyer.
The move underscores the growing opportunity that those in the world of customer engagement and CRM — which include not just Sinch and Kustomer but Salesforce and many others — are seeing to double down on their services at the moment. With people working and doing everything else remotely, and with the general upheaval we’ve had in the global economy due to COVID-19, there has been an increased demand and strain put on the digital channels that people use to communicate with organizations when they have questions or problems.
The catch is that customer relations and engaging users has grown to be more than just 1-800 numbers and being on hold for endless hours: It includes social media, email, websites with interactive chats, chatbots, messaging apps and, yes, those phone calls.
Organizations like Sinch and Kustomer — which build platforms to help businesses manage all of those fragmented options in what are described as omnichannel offerings, have been capitalising on the demand and are now investing and looking for the next step in their strategies to grow.
For Kustomer, that has been leaping into the arms of Facebook, which itself has spotted an opportunity to build out a CRM business to complement its other services for businesses. Recall that it’s also been experimenting and working on its latest Nextdoor competitor to promote local businesses; and it has added a ton of business tools to its messaging apps too.
It will be interesting to see what Salesforce does next. While acquiring Slack gives the company an obvious channel into workplace communications, don’t forget that Slack is also a very popular tool for engaging with people outside of your employee network, too. It will be worth watching how and if Salesforce looks to develop that aspect of the business, too.
For Sinch, its strategy has been around making acquisitions of its own, including paying $250 million to pick up a business unit of SAP, Digital Interconnect, which has 1,500 enterprise customers, mostly in the U.S., using it to run “omnichannel” communications. Now the plan will be to do more, since there are still huge swathes of the market that have yet to upgrade and update their approaches.
Sinch, notably, is traded publicly on Sweden’s stock exchange and currently has a market cap of SEK 70 billion ($8.2 billion at current rates). It is profitable and generating cash, so has “no need to raise funding for our ongoing business,” Thomas Heath, Sinch’s chief strategy officer and head of investor relations, told TechCrunch.
For SoftBank, the investment marks another step in the company taking sizable stakes in fast-growing public or semi-public tech companies in Europe.
In October, it put $215 million into Kahoot, the online education platform aimed both at students and enterprises, built around the concept of users themselves creating “learning games” that can then be shared with others. Kahoot trades a proportion of its shares publicly on the stock exchange in Norway and, like Sinch, the plan is to use a good part of the money for acquisitions.
Not all of SoftBank’s investments in scaled-up European businesses have panned out. Having put around $1 billion into German payments company Wirecard, the company turned out to be one of the biggest scandals in the history of European fintech, facing accounting scandals before collapsing into insolvency earlier this year.
Sinch, as a profitable and a steady business with predictable lines of recurring revenue, looks like a safer bet for now. Even with Salesforce, Facebook and others raising their game, as Sinch’s CEO says, there is enough of an untapped market that playing well might be enough to do well.
Updated to clarify that Sinch considers its work “customer experience” more than CRM.