Emerging Opportunities in Chatbots
Grata Co-founder Nevin Raj discussed the promising chatbot sector with industry experts during a panel session sponsored by SAP at ACG’s Winter Summit.
There is not much private equity activity yet in chatbots and conversational AI, but with the chance to remake entire industries, it’s ripe for middle-market investors in coming years. Grata Co-founder Nevin Raj discussed the promising chatbot sector with industry experts during a panel session sponsored by SAP at ACG’s Winter Summit on Jan. 27.
Greg Petraetis, a senior vice president and general manager at SAP North America, said he’s witnessed chatbots concentrate in the direct-to-consumer, retail, travel, health care and IT industries. “Consumers want fast answers. There’s huge values for the end user in this equation,” he said.
SAP’s customers are seeing a 60% average reduction in operating costs associated with chatbot implementation, according to Petraetis.
One SAP customer, a large hospital system, set up a self-service multilingual symptom-checker chatbot that they built into a website using SAP conversational AI.
The chatbot helped the hospital reach diverse populations and deliver care during the COVID-19 pandemic. “Chatbots were saving lives by giving practitioners a single source of truth to go to for intake information,” Petraetis said.
Michael Lamm, a managing partner at investment bank Corporate Advisory Solutions, is also seeing chatbot applications in health care, especially for revenue cycle management, bill coding and collection.
“The market’s really evolving and health care has been slow to move on everything, but I think due to COVID and the evolution of telehealth, it’s been a big movement for automation,” Lamm said.
Much of the chatbot sector is concentrated in venture capital and startups, but middle-market investors might find opportunities in developing customer call centers with chatbot support. Companies in the segment are growing at about 12% annually, according to Grata.
“We’re seeing a lot more opportunity for VC companies that are maturing and turning into middle-market opportunities for private equity, as well as strategic [buyers],” Lamm said.
And an increasing number of companies are looking to scale, according to Petraetis. “If I look at the companies that we work with, they don’t want to be small and medium businesses. They want to be the next big company,” he said.
Beyond customer service, Lamm said the increasing use of chatbots could spur demand for data science services to draw actionable insights and determine consumer decision making.
Other B2B applications include using chatbots to help employees juggle more tasks and increase productivity. “The efficiency gains across the B2B landscape is tremendous,” Lamm said.
Benjamin Glick is Middle Market Growth’s associate editor.
