Decagon, a two-year-old AI startup helping companies cut customer support costs, is in talks to raise $100 million at a $1.5 billion valuation, according to Forbes, which cites multiple sources familiar with the deal.
Founded in 2023 by Jesse Zhang and Ashwin Sreenivas, Decagon builds customer support agents powered by artificial intelligence. These agents can handle common service tasks like issuing refunds, canceling subscriptions and answering product questions. Companies including Notion, Duolingo DUOL, Bilt, Substack and Rippling already use the software.
“We think AI agents can be 10x employees,” Zhang told Forbes.
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Winning Bake-Offs, Cutting Costs
Decagon’s rise has been driven by its performance in what insiders call “bake-offs,” where companies test AI tools head-to-head. “Decagon claims they win almost every time they go up against Sierra head to head,” one investor involved in the talks told Forbes. Sierra is a newer rival that is led by former Salesforce CRM co-CEO Bret Taylor.
Startups are turning to these agents to handle tedious tasks that would otherwise require large outsourced teams. Forbes reported that Bilt, for example, reduced its customer support team from hundreds of contractors to just 65 after adopting Decagon. Another unnamed client reportedly cut 80% of its support staff. ClassPass, which uses Decagon to manage more than 2.5 million customer conversations, slashed its cost per reservation by 95%, according to The Information.
$200 Million in Total Funding
The potential new funding round is being led by Andreessen Horowitz and Accel, with participation from existing backers. It would bring Decagon’s total funding to $200 million, following a $65 million Series B round announced in October that valued the company at $650 million.
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The company’s AI agents run on top of large language models from OpenAI, Anthropic and Cohere, and are fine-tuned using company-specific data like user manuals, how-to guides and historical customer service chats. A proprietary system helps companies keep this training data fresh and relevant.
Control, Transparency, and Voice
A key selling point, according to investors, is that Decagon gives businesses clear control over how its AI responds to customers.
“You as a customer can actually see what’s happening, understand it, and change things,” investor Elad Gil told Forbes. “You have control so that it really does the things that you want it to do.”
Decagon has also started partnering with ElevenLabs to build voice-enabled agents that sound more human, pushing beyond typed chat interactions.
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Salesforce Enters the Arena
While Decagon has earned praise for its performance and transparency, it faces stiff competition. Salesforce recently launched Agentforce 2dx, a major update to its AI platform that allows agents to work behind the scenes, not just in chat windows. The update includes low-code and pro-code tools for building agents, real-time monitoring, and a developer edition for testing.
“We’re making it easier than ever for businesses to embed agentic AI into any workflow,” Adam Evans, Salesforce’s EVP and GM of AI Platform, said in a statement.
Salesforce also introduced AgentExchange, a marketplace that allows developers and partners to monetize prebuilt AI actions, templates and solutions.
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