Toronto’s Ada to merge with U.S. firm Dialpad

Toronto customer service software company Ada is merging with U.S. firm Dialpad, the two companies announced Wednesday, in an all-share deal reported to value Ada at about $600 million.

Dialpad, based in California, said in a blog post that the companies are “joining forces” to build what it called an operating system for customer work, combining its communications network and speech and language models with Ada’s AI agents for customer service. Craig Walker, Dialpad’s founder, wrote that he has known Ada chief executive Mike Murchison for years and that the two spoke a few months ago about combining their products.

The valuation figure comes from The Globe and Mail, which first reported the deal Tuesday, as relayed by BetaKit. Neither company has publicly confirmed the terms, and Canada News Media could not independently verify the price.

If the figure holds, it is a steep drop for one of the country’s best-known AI startups. Ada was valued at US$1.2 billion when it closed a US$130-million Series C round in 2021, led by Spark Capital, at the height of the pandemic-era tech boom. The company has since laid off staff more than once, including two rounds reported after September 2022, as it shifted from building chatbots to AI agents powered by large language models.

Founded in 2016 by Murchison and David Hariri, Ada helps companies automate customer service. Dialpad, founded in 2011, sells communications, contact centre and sales software to businesses and has also moved toward AI.

Dialpad said customers’ contracts, pricing, account teams, support channels and existing integrations will not change, and that Ada-powered AI agents are available now through Dialpad account teams. It said it will share more on integration over the coming months.

Ada competes against better-funded rivals in AI customer service, including Decagon and Sierra, BetaKit reported. Other Canadian companies that raised money at high valuations in 2021 have also struggled to grow into them. Other Canadian AI companies have had a different week: Ottawa said it would invest up to $1.6 billion in Cohere, Coveo bought Anglera, and Ottawa’s Solink raised US$100 million.

The announcements did not say where the combined company will be headquartered or what the deal means for Ada’s Toronto staff. BetaKit said it has asked both companies for comment on the deal and its terms.

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Sources: Dialpad, BetaKit, citing The Globe and Mail.