CORRECTION: We apologise for the previous headline which might have led readers to think Zopim is entering IPO. It should have been Zendesk instead.
In its first acquisition before its US$150 million scheduled IPO, Zendesk is buying out Singapore-based Zopim.
Zopim’s flagship chat software allows brands to have live conversations with visitors on websites in the form of a widget and is used by some 120,000 websites.
UPDATE: According to Zendesk’s S-1 filing, the Zopim deal could be worth up to US$29.8 million. The first part of that is the upfront payment of US$15.9 million, with US$5 million in cash and US$10.9 million in common stock. Additionally, US$1.1 million of cash and US$2.4 million of the common stock consideration is to be held back as a partial security for 12 months and 18 months respectively. The second part is an additional earn-out of up to US$13.9 million in cash and equity over two and three years to be paid to Zopim employees under condition of continued employment.
As a result of the acquisition, Zendesk will be phasing out its own chat software and integrating Zopim software into its platform, writes Adrian McDermott, SVP of Product Development, Zendesk in a blog post announcing the news. This will no doubt make relationships between Zendesk and its clients more fluid.
It was also reported that the entire Zopim team is joining Zendesk. This potentially gives the San Francisco-based company an expansion point into Asia (read Singapore). According to Techcrunch, currently about 41 per cent of Zendesk’s customers come from outside the US. Additionally, industry sources have revealed to e27 that Zopim had once looked at raising funds from Silicon Valley investors.
McDermott claims to have acquired Zopim to accelerate its chat functionality and bring users a beautifully simple product they can use to engage their customers in real-time. He also stated, “Zopim has a great track record of providing tools for proactive customer experiences to customers worldwide.”
Could this acquisition be part of a bigger strategy? This can possibly be a scenario wherein there is a bigger deal in play. For example, in 2010, McAfee bought Tencube, which came up with a mobile security service called WaveSecure. Eventually, a larger deal took place wherein Intel bought McAfee.
This is interesting as Viki, a streaming video platform that crowdsources translated subtitles, was also trying to raise money, but got acquired instead by Rakuten for a reported US$200 million.
Zopim was launched in 2008, and it came out of beta two years later. By 2012, it had hit an annual sales revenue of US$1 million. Zopim had raised under US$500,000 since being founded, and was also one of the earlier companies that was funded by iJam. The startup received support from Media Development Authority (MDA) Singapore, SPRING Singapore and the National University of Singapore.