Yalo Raises $50M for C-Commerce on WhatsApp | TechCrunch

WhatsApp Commerce Platform Yalo Secures $50 Million in Funding

For a considerable period, Facebook has been actively working to enhance WhatsApp's standing as a key channel for businesses to connect with, and facilitate sales to, their customer base. Today, a startup specializing in a suite of tools designed for retailers and others to establish and manage these services via WhatsApp and other messaging platforms has announced a new round of funding to capitalize on this growing opportunity.

Yalo's Expansion into Emerging Markets

Yalo, a company defining itself as a “chat commerce” (c-commerce) startup, develops tools enabling businesses to integrate messaging apps into their customer outreach and sales strategies. The company has successfully raised $50 million in funding, which will be allocated towards expanding its services, with a particular emphasis on burgeoning markets such as Latin America and Southeast Asia.

Currently, Yalo’s client roster includes prominent brands like Unilever, Nestle, Coca-Cola, and Walmart, utilizing its platform for both sales and marketing initiatives. This represents a potential reach of 350 million consumers, although Yalo does not disclose the precise number of users actively engaging with its services.

Investment Details and Background

The funding round was spearheaded by B Capital, with contributions from other undisclosed investors. Yalo, recently rebranded from Yalochat, has been consistently attracting investment; its previous round, a $15 million Series B, occurred in August. The involvement of B Capital is noteworthy, considering Yalo’s focus on enhancing business utilization of Facebook applications for customer interaction, as the venture capital firm was co-founded by Eduardo Saverin, a co-founder of Facebook.

The Rise of Conversational Commerce

According to CEO Javier Mata, the rapid pace of business growth over the past year, coupled with the broader surge in e-commerce, drove the need for additional funding.

“The COVID-19 pandemic accelerated the evolution towards the future, significantly increasing the demand for conversational commerce,” Mata explained. “It transitioned from being just one digital commerce channel to becoming the primary one.” He noted that some of Yalo’s customers are now experiencing 80% of their sales occurring within messaging apps, a substantial shift for brands traditionally reliant on physical retail channels like supermarkets or vending machines.

Accelerating Product Development

Mata further stated that Yalo wasn’t actively seeking funding, but an opportunity arose to accelerate growth. “Everything we do centers around delivering value to our customers, and in this instance, we decided to expedite our product development to provide conversational marketing, payments, and a no-code builder for creating various conversational applications sooner.”

While Yalo has not disclosed its current valuation, the startup has now raised a total of $75 million, with previous investors including NXTP from Argentina and Sierra Ventures.

Strategic Focus on Messaging Apps

Originating in Mexico and now headquartered in San Francisco, Yalo operates in Mexico, India, Brazil, and the U.S. The company’s strategy centers on leveraging the central role messaging apps play in the lives of consumers, particularly in emerging markets, where individuals frequently use their phones not only for communication but also for accessing a wide array of services.

Following the "Super App" Model

This approach mirrors the strategies of messaging giants like Facebook, drawing inspiration from companies like WeChat and Line in Asia. These platforms have successfully expanded beyond basic messaging to become “super apps,” offering a comprehensive suite of services including payments, shopping, entertainment, and news, both developed internally and by third parties, serving hundreds of millions of users.

WhatsApp as the Primary Platform

Mata confirmed that WhatsApp is currently Yalo’s largest platform “by a significant margin,” with SMS ranking second in usage, and therefore receiving the majority of the company’s current focus.

Yalo's Platform: Bridging Brands and Messaging Apps

While WhatsApp is expanding its service capabilities, Yalo provides a platform that connects brands with these apps. Its service, compatible with various messaging applications (described as platform-agnostic), enables agencies or brands to plan and execute marketing and sales campaigns, offer customer support, and process payments, allowing customers to create “micro apps” within messaging environments.

Emerging Markets Lead the Way

Yalo’s focus on emerging markets aligns with the broader trend of messaging and mobile technology adoption in these regions. Consumers in developing economies often bypassed traditional computers, initially accessing the internet through affordable smartphones. This led to a mobile-first digital experience, making them more receptive to using messaging apps for purposes beyond simple communication.

Global Expansion Potential

Mata anticipates that more developed economies will eventually follow suit.

“We’ve seen a progression from brick-and-mortar stores to desktop apps, then to web apps, mobile apps, and now conversational apps,” Mata stated. “Conversational apps are the future because they leverage existing messaging apps, eliminating the need for users to download or learn new interfaces. Adopting new technology is easier when it doesn’t require replacing existing systems.”

He believes that while emerging markets are leading the charge, the U.S. and other developed nations will eventually catch up, blurring the lines between e-commerce and c-commerce. He pointed to the growth of text marketing as an indicator of this trend, and highlighted China’s advanced digital landscape, where conversational commerce through WeChat is dominant.

Market Growth Projections

According to BCG estimates, c-commerce is currently a $35 billion market and is projected to reach $130 billion by 2025 in emerging markets alone, representing 60% of all digital commerce.

Future Competition and Challenges

A key question remains: if c-commerce gains widespread adoption, will platforms like Facebook seek to control the entire integration experience, or will established web commerce companies like Shopify, Magento, and Amazon enter the space, potentially creating competition for Yalo?

However, investors are not currently concerned.

“Yalo has established itself as the leading conversational commerce company, transforming how large enterprises engage with their customers and enabling transactions through chat applications. We have been impressed by their execution and are pleased to further our relationship by leading their Series C round,” said Saverin in a statement.