Facebook Moves to Buy Kustomer for Over $1 Billion

Issue 47

11.30.20 - Facebook is in talks to buy Kustomer, a startup that specializes in customer-service platforms and chatbots, part of an effort by the social-media giant to help companies use its platforms to do business.

Facebook announced the deal in a posting Monday, confirming earlier reports. Though terms weren’t fully disclosed, Facebook said it would value New York-based Kustomer at a little over $1 billion.

Closely held Kustomer, whose technology takes conversations from different channels and puts them on a single interface, was valued at over $710 million in a private funding round roughly a year ago, according to PitchBook data.

Increasingly, customers are communicating with companies by messaging instead of calling. Facebook said more than 175 million people reach out every day to businesses using its WhatsApp messaging service.
Kustomer already has a relationship with Facebook. Its offerings allow companies to aggregate and respond to customer inquiries that come in through Facebook Messenger. In October, Kustomer said it also began integrating with Facebook’s Instagram messaging.

The acquisition would further bolster Facebooks social commerce initiative moving towards next gen consumer trends, people want to see products and interact with companies directly where they are spending their online time rather than having to go through more points of friction with more clicks to buy a product. If Facebook gets this formula right, the company could potentially contend with major ecommerce players down the line as the position themselves to be in the driver’s seat with how consumers buy products rather than simply help other companies advertise.

Source: Bloomberg