UC Berkeley Dropout Startup Raises $28M for AI Marketing

Conversion Secures $28 Million Series A Funding

Conversion, an AI-driven marketing automation company, has successfully closed a $28 million Series A funding round. The investment was spearheaded by Abstract, with significant contributions from True Ventures and HOF Capital. The startup was established five years ago by two former students of UC Berkeley.

The Origin Story

The company’s beginnings bear a striking resemblance to narratives often seen in the tech world.

The story traces back to when co-founder and CEO, Neil Tewari, currently 24 years old, faced disciplinary action in high school. He was caught watching a TechCrunch Disrupt livestream during class and was subsequently sent to the principal’s office.

Reluctant to inform his parents about the situation, Tewari contacted a family friend for assistance. During the ride home, he shared his entrepreneurial interests with the friend, who later became the first investor in the company, as Tewari recounted to TechCrunch.

From Side Projects to a Viable Business

James Jiao, Tewari’s roommate at Berkeley and now Conversion’s co-founder and CTO, also harbored ambitions of launching a company. Together, they initially explored various product ideas, including a platform for facilitating product placement advertisements.

The concept for Conversion emerged when they utilized HubSpot for their own marketing needs and decided to develop supplementary automation features.

“Initially, the technology was built for our internal use,” Tewari explained. The co-founders found the development process so engaging that they considered offering it as a product and began conducting “customer discovery” interviews with marketing leaders.

“We dedicated two months to conducting approximately 160 interviews with VPs of marketing in companies ranging from 50 to 500 employees, and the feedback was overwhelmingly positive,” Tewari stated.

Identifying a Market Need

Marketing teams were already heavily reliant on existing tools, but consistently expressed dissatisfaction with the limitations in automation capabilities.

This realization led the duo to their core idea. Leveraging introductions from the family friend, they secured a $2 million seed round. Subsequently, at the age of 19, they made the decision to leave college and dedicate themselves fully to Conversion.

The founders demonstrated remarkable financial prudence, residing in a modest two-bedroom apartment shared with five other roommates, with occupants sharing rooms and utilizing unconventional sleeping arrangements.

Leveraging the Rise of AI

As they refined their product, the emergence of ChatGPT significantly impacted the landscape. While established marketing automation platforms are integrating AI and chat functionalities, not all features are fully compatible.

Marketing teams are seeking the ability to enhance contact data and automate workflows, according to Tewari. Conversion has integrated AI directly into its core functionality, enabling features such as lead organization and automated personalized email follow-ups.

The increasing interest in AI has correlated with the company’s growth. Conversion is approaching $10 million in Annual Recurring Revenue (ARR) over the past two years, with approximately 90% of its clientele being mid-sized businesses that have replaced existing solutions.

Competitive Landscape and Future Strategy

The marketing automation sector is highly competitive. In addition to established players like HubSpot, Adobe Marketo, and Salesforce Pardot, numerous AI-native startups, including Jasper, Writer AI, Iterable, and Copy.ai, are also vying for market share.

However, Tewari exudes the typical confidence of a Silicon Valley founder. His strategy focuses on targeting businesses currently utilizing older marketing tools, rather than new companies selecting a platform for the first time.

With a total of $30 million raised across its seed and Series A rounds, the company is thriving, allowing the founders to secure individual apartments and enjoy the comfort of having their own private spaces.