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Twilio to acquire Seattle business texting startup Zipwhip for $850M

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Zipwhip CEO John Lauer
Zipwhip CEO John Lauer shows off the company’s Texterator, a text-enabled beer bot that made its debut at the 2016 GeekWire Gala. (Zipwhip Photo)

Twilio, a communications software company with Seattle roots, is acquiring Seattle-based business-texting startup Zipwhip for approximately $850 million in a cash and stock deal, the companies announced Monday.

Founded in 2007, Zipwhip originally targeted consumers and set out to be the “Facebook of text messaging.” But it pivoted around 2013, taking a different approach by working with wireless carriers to enable hundreds of millions of business landlines to receive and send text messages. This allowed companies to text with their customers from landline phones, VoIP services, and toll-free numbers.

“Twilio and Zipwhip share a vision for the future of business messaging and its growing role within customer engagement,” Zipwhip co-founder and CEO John Lauer said in a news release. “Zipwhip’s goal is to make sure every business we serve can text their customers using their existing business phone numbers and, together, we have a unique opportunity to elevate the customer experience, helping brands better communicate via a trusted and growing channel that’s been proven to drive long-term customer satisfaction.”

Twilio actually started in Seattle 13 years ago, the brainchild of founder Jeff Lawson, who previously served as one of the first product managers at Amazon Web Services. The company later relocated to San Francisco.

While the acquisition ranks among the more substantial in Seattle’s startup scene, it’s certainly not Twilio’s largest acquisition. The company has flexed its muscle in recent years with the purchases of email API platform SendGrid for $3 billion in 2019 and customer data platform Segment for $3.2 billion last year.

Twilio’s fast growth and expansion into the communications field has been richly rewarded on Wall Street. The company now boasts a market value of $51 billion, and the stock has climbed 62% in the past year.”

The company reported revenue of $590 million for the first quarter of 2021, and non-GAAP profits of $17.3 million, up from $6.1 million. The company has more than 235,000 active customer accounts as of March 31, up from 190,000 a year ago.

The Zipwhip team in an undated photo shared by investor Voyager Capital.

Zipwhip raised $51.5 million in a Series D round led by Goldman Sachs Private Capital Investing group, along with existing investors including OpenView, M12, and Voyager Capital. The company was valued at $261.5 million after that financing, according to PitchBook, and total funding in Zipwhip was $92.5 million.

According Zipwhip’s State of Texting 2021, the company said more businesses adopted texting as a way to connect with customers during the pandemic.

“Twilio, a long-time partner of ours, has seen the immense value we’ve built and the potential for even greater expansion of our offering,” Lauer said in a blog post about the deal. “By acquiring Zipwhip and joining our teams together, we’ll be able to execute our shared goals of changing the way businesses and consumers communicate.”

Zipwhip employs about 275 people and moved into a new headquarters space in the Elliott Bay Office Park in 2019.

This is a developing story. Check back for updates.

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