Even while it may be difficult to get capital at the present for some areas of the technology sector, artificial intelligence (AI) and, more particularly, companies that are utilising AI to build up revenue-generating enterprises, continue to attract a lot of interest. Zappi, a startup that has developed a platform for doing market research that makes use of artificial intelligence and automation to significantly increase productivity while simultaneously decreasing expenses by a factor of ten, has just announced that it has successfully funded $170 million.
Sumeru Equity Partners is the primary investor, with additional backers who remain anonymous at this time. Zappi is remaining silent about its value in this round, but to give you an idea of the scope of the company: Zappi was profitable until it decided to focus on growth a year ago; the company had only received approximately $22 million since its 2012 inception (from investors including WPP); and its revenue had reached roughly $50 million by the end of 2017. (Note: don’t try to use multiples of that to compute valuation; that measure looks all over the place right now, ranging from 12x revenues up to 20x, and I’m sure there are greater and lower examples as well.)
Zappi now has over 350 clients, including major FMCG companies such as PepsiCo, McDonald’s, Heineken, and Reckitt. The company’s fundamental offering is a survey platform that aids clients in gauging consumer opinion on potential new goods and marketing strategies before they’re ever created. According to an interview with CEO and co-founder Steve Phillips, Zappi is most commonly employed in the pre-product stage. According to him, the target market is massive: each year, businesses invest $90 billion on gathering customer data.
Large FMCG firms may spend up to $20,000 on such research, which typically takes four to six weeks to complete due to the time and effort required to conduct in-depth surveys of user panels and then analyse the resulting data. Zappi claims that it can conduct the same research in four to six hours for $2,000 by combining human surveys (it integrates with other companies that bui
ld those networks of respondents and might get as many as 300 or 400 people per campaign) with a large amount of other data, including its own consumer database, which contains, according to Zappi, 1.2 billion data points. These studies are accompanied with reports that clients of Zappi may utilise as a part of their broader, in-house analytics.
Zappi is trying to fill a void in the market caused by the fact that many fast-moving consumer goods (FMCG) firms lack significant digital DNA. Products are tangible consumables, but they are also produced and delivered in a regionally specific manner, using traditionally analogue means such as stores and third parties. According to Phillips, this results in “flying blind when releasing a new product.”
Developing new items to test on the market is a risky business since companies may spend money on them before they know how well they will be received by consumers. For brevity’s sake, we reasoned, “Why not automate that?”
The emergence of the Covid-19 epidemic coincides with a surge in interest in artificial intelligence (AI) among non-tech organisations looking to streamline their operations. (For example, Zappi’s biggest customer PepsiCo has been employing different forms of AI in product creation for years.)
However, the pandemic was felt keenly in that environment because of the inextricable link between the physical supply and distribution networks and many of the items sold there. Phillips argues that the necessity of rethinking all of that has boosted digital transformation and encouraged more businesses to consider partnering with firms like Zappi in fields like marketing and market research.
“We see a world where every single company wants to know what its customers are thinking — driving tens of billions of annual spend on researching consumer insights,” said Sanjeet Mitra, George Kadifa and Sofija Ostojic. “Zappi has reimagined the entire process by using innovative technology to empower enterprises to collaborate with customers in real-time, resulting in meaningful product and advertising decisions made more efficiently and thoughtfully. We are incredibly excited to partner with the Zappi team and are proud to invest in a company with culture and community impact at the center of its strategy.”
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