Sierra, an AI-focused software startup co-founded by former Salesforce co-CEO Bret Taylor, announced on Monday that it raised $175 million in a new funding round led by Greenoaks Capital, boosting its valuation to $4.5 billion. This financing comes within a year of Sierra’s public launch, marking Taylor as one of Silicon Valley’s most closely watched entrepreneurs. Sierra specializes in enhancing AI-driven customer service for clients like WeightWatchers and Sirius XM. Sources familiar with the company’s performance reported to Reuters earlier this year that Sierra has already surpassed $20 million in annualized revenue, highlighting strong investor interest in AI-backed ventures led by established founders.
The deal paved the way for Sierra to compete with more established players, such as Salesforce and Microsoft, which also developed AI customer service bots. Taylor, who also serves as chairman of OpenAI, has positioned the company at the forefront of AI’s transition from foundational models to enterprise-ready tools that deliver consistent, reliable customer interactions. His strategy focuses on mitigating issues such as “hallucinations,” where AI generates false information so brands can trust the data that their agents are interacting with.
The company is using its latest investment to develop its technology further and invest in hiring and marketing efforts. Its product integrates AI models from companies like OpenAI, Anthropic, and Meta, paired with its algorithms to create more polished, user-friendly experiences. It has even banned the word “chatbot” from its offices to emphasize its dedication to crafting smoother, more human interaction models than those typically associated with automated customer service bots.
Its business model differs from other AI startups, as it builds AI agents for its customers instead of merely selling the tools to let them do so themselves. It says it is faster to onboard customers with its solution than competitors and can update the AI agent to reflect changing policies or new needs much more quickly.
The latest financing round reflects investor interest in AI applications that can deliver steady revenue as investors shift away from large, foundational AI models toward AI-powered businesses that can be used for real-world problems. Other recent examples of this trend include OpenAI, which recently closed a $650 million raise at a $157 billion valuation, and Perplexity AI, which is looking to close a $500 million funding round. The news comes amid growing concerns about a potential bubble in the AI space. OpenAI recently warned that AI bubbles may be emerging and has encouraged its shareholders to take steps to protect their investments.