Bret Taylor’s Sierra raises nearly $1B in latest AI capital push
AI startup Sierra is raising nearly a billion dollars in a new funding round, CNBC has learned, as venture capital investors search for winners in an ongoing deal frenzy.
The San Francisco-based company brought in $950 million in new capital at a $15.8 billion valuation, led by Tiger Global and Google’s GV. Benchmark, Sequoia, Greenoaks and other existing investors also participated.
The startup was founded three years ago by the former chairman of OpenAI. sales force with former CEO Bret Taylor Google manager Clay Bavor. Taylor was also chief technology officer. FacebookHe was chairman and chairman of Twitter when Elon Musk acquired the social media network. Sierra’s founders met at Google; here Taylor is widely credited with helping create Google Maps and Bavor pioneered virtual reality work and Google Labs.
Sierra sells AI customer service agents and is positioning itself as a leader in a new class of software companies built on the core models of OpenAI and Anthropic. According to Taylor, the company leverages a “set of models” as well as its own fine-tuned custom layers.
Sierra has achieved over $150 million in annual recurring revenue (ARR) in eight quarters, according to the company. Taylor said this growth timeline is unprecedented for traditional software and underscores “strong demand in the market.”
“It’s a really large, addressable market and there’s an immediate opportunity,” Taylor said. “We’ve kind of digitized the phone line, which is the last remaining analog channel, so it’s a better experience. You don’t have to wait on hold. These agents are naturally multilingual.”
Taylor estimates that $400 billion is spent annually on customer service. Most of that goes to AI agents, he said.
AI competition
The funding round is the latest deal in what has been a hot area for investors. Deals of this size have come to define the recent startup landscape, with investors flocking to what they see as category leaders. There’s an appetite to back names beyond behemoths like OpenAI and Anthropic, whose valuations are approaching $1 trillion.
Taylor described these cool AI coding agency companies: Cursor and Replit are the largest areas of the market, followed by customer service representatives. He said the new cash injection was about maintaining leadership in an increasingly crowded field.
“There’s a lot of competition. We’re many times larger than the next largest company, and we’re looking to invest aggressively so we can continue to expand our lead,” Taylor said.
Sierra’s customers are mostly businesses such as: Cautious, CignaBlue Cross Blue Shield and Rocket Mortgageand one of the three largest banks in the world. The startup serves more than 40 percent of the Fortune 50, Taylor said.
Benchmark’s general partner, Peter Fenton, was an early investor in Sierra and also participated in the Series E. He noted the startup’s revenue momentum and how long it took previous generations of software companies to reach the same milestones.
“It’s ridiculous how quickly this happened.” Fenton said in an interview. “When measured by objective facts like revenue scale and quality of customer base, Sierra is a winner in the ‘customer experience’ category across the board.”
Fenton said the size of this funding round will help Sierra maintain its leadership position.
According to Fenton, the startup was also able to convince and quickly onboard traditional companies that were not always so quick to adopt the technology.
“You’re seeing some industries that have historically been slower to adopt realize that a cautious, expectant approach to AI is a path to extinction.”
Taylor is at the center of the AI boom as head of OpenAI. He likens the current artificial intelligence boom to the early days of the internet and says it will create a new generation of trillion-dollar giants. Still, he predicts a correction in the market within the next two years.
“When there is this much genuine excitement about a market, you end up with too much capital and too many companies,” Taylor said, predicting a “culling effect” in which capital would dry up for all but market leaders.
For Sierra, that means staying under wraps for now. Taylor said going public is “definitely in our future,” but he sees going private as an advantage and a buffer as we go through the growing pains of rapid scaling.
