VentureBeat: OpenPhone raises $14 million to replace antiquated business phone systems with an app
VentureBeat – November 17, 2020
By Paul Sawers
OpenPhone, a company setting out to replace “antiquated” business phone systems with an app, has raised $14 million in a series A round led by David Sacks’ Craft Ventures.
The round comes as demand for cloud-based communications grows with the pandemic-driven rise of remote work. OpenPhone said it has tripled its user base since its $2 million seed round in January, with revenue growing apace.
“With offices going remote, it makes no sense to have an expensive phone system sitting in an office with no one to pick it up,” Sacks, who also now joins OpenPhone’s board of directors, told VentureBeat. “OpenPhone puts the business phone inside a collaborative app that anyone on the team can use from wherever they are.”
While there are plenty of legacy providers and new entrants in the business phone systems space, OpenPhone is focusing on not just productivity and software integrations, but revamping the entire system.
“In general, all existing phone systems are built around the legacy view of how the phone works — a PBX, extension-based system — and end up being voice-heavy,” OpenPhone cofounder and chief operating officer Daryna Kulya told VentureBeat. “Instead, OpenPhone is centered around relationships. It helps its customers not just call and text, but also manage their relationships and be productive.”
How it works
Founded out of San Francisco in 2018, OpenPhone is available for desktop and iOS and Android devices, offering business users a single phone number their entire team can access, in addition to individual numbers for each user in a team or across the company.
With the app, users can easily distinguish between incoming business and personal calls. Not giving out their personal number also means they can better control their hours of work, with calls in the OpenPhone app deactivated during set times.
In addition to voice calls, OpenPhone supports text messages, with the ability to configure prewritten replies to automatically respond to texts or missed calls. It can also convert voicemails into text so they can be skimmed and prioritized as required. Calls can be set to automatically record, and OpenPhone’s built-in address book can be used as a sort of lightweight customer relationship management (CRM) tool, with the ability to add customized property fields to each contact.
Integrations with email and Slack that funnel voicemail and text messages to predefined channels round out the offering.
Alongside today’s funding news, OpenPhone is introducing a bunch of new features, including analytics that show the total number of calls placed or messages sent (by a team or individual) during a certain time frame. This feature also shows the busiest times of the week or month for conversations.
OpenPhone is also rolling out expanded search functionality, making it easier to immediately find any contact, message, voicemail, or call transcript. Support for group messaging and new integrations with HubSpot’s CRM and Zapier’s automation platform add further utility to the mix.
The company’s pricing starts at $10 per user per month for a fairly extensive set of features, though anyone wanting HubSpot CRM integration or analytics will need to pay $25 per user per month.
Lay of the land
Rivals in the space include Aircall, which raised $65 million earlier this year, though it is primarily a contact center platform. Its business phone system doesn’t support messaging, and it has a minimum user requirement of three people, which precludes freelancers and other individuals. Then there’s Dialpad, which raised $165 million at a $1.2 billion valuation last month, though its product suite isn’t focused squarely on business phone systems and seems to target larger companies. Citrix-owned Grasshopper is another contender, with an offering fairly similar to OpenPhone’s.
OpenPhone is not in any way pitched as a call center product, even though some smaller companies could use it to manage inbound customer calls. Instead, it’s aimed at people looking for a business phone number — from freelancers to small sales teams, contractors, and journalists — and bigger companies ready to modernize their existing phone systems. Businesses looking to manage inbound calls at any meaningful scale would be better off using a dedicated contact center platform.
OpenPhone plays a strong role in being the business phone for people who rely on their phones to build and manage relationships,” OpenPhone cofounder and CEO Mahyar Raissi said. “A company at scale could use OpenPhone to give every person in HR, operations, management, product, and sales their own business phone lines.”
It’s also worth mentioning the elephant in the room — Google Voice, which has targeted the enterprise market for the past couple of years. However, the business-focused edition of Google Voice is restricted to Google Workspace (formerly G Suite) subscribers, while the consumer version of Google Voice lacks many of the features that make a business phone system appealing in the first place.
OpenPhone is currently limited to local U.S. and Canadian phone numbers and unlimited calls and texts. But the company today revealed that it will begin supporting international calling and messaging for an additional fee. Further down the line, it also plans to introduce local numbers for other markets around the world.
In addition to Craft Ventures, the round announced today includes backing from Y Combinator, Slow Ventures, Kindred Ventures, Garage Capital, Hack VC, and Chapter One Ventures. The raise positions OpenPhone to expand its team and continue building out its product.