By Cara Lombardo and Dana Cimilluca 

Facebook Inc. said it would buy Kustomer, a startup that specializes in customer-service platforms and chatbots, part of an effort by the social-media giant to help companies use its platforms to do business.

Facebook announced the deal in a posting Monday, confirming an earlier report by The Wall Street Journal. Though terms weren't disclosed, people familiar with the matter said it would value New York-based Kustomer at a little over $1 billion.

Closely held Kustomer, whose technology takes conversations from different channels and puts them on a single screen, was valued at $710 million in a private funding round roughly a year ago, according to PitchBook.

Increasingly, customers are communicating with companies by messaging instead of calling. Every day, more than 175 million people reach out to businesses using WhatsApp, Facebook said in the posting.

Kustomer already has a relationship with Facebook. Its offerings allow companies to aggregate and respond to customer inquiries that come in through Facebook Messenger. In October, Kustomer said it also began integrating with Facebook's Instagram messaging.

Facebook, which has been in the spotlight for its handling of political and other content on its platform, has been making a big push into what Chief Executive Mark Zuckerberg has called "social commerce." This deal could further that effort. In May, the social-media giant launched Facebook Shops, which lets companies create online stores through Facebook and Instagram.

Kustomer was founded in 2015 by Brad Birnbaum and Jeremy Suriel, two entrepreneurs who sold a previous company to Inc. Kustomer's investors include Coatue Management and Tiger Global Management.

Facebook, which has a market value of over $790 billion, has a long history of deal making, having purchased over 100 companies, according to FactSet. Its highest-profile acquisitions include paying around $1 billion for Instagram in 2012 -- far less than what the popular photo- and video-sharing platform is likely worth now -- and around $19 billion for WhatsApp in 2014. In May, it bought Giphy, an online platform where users can search for animated photos known as GIFs, for around $400 million.

JPMorgan Chase & Co. was sole financial adviser to Kustomer.

Write to Cara Lombardo at and Dana Cimilluca at


(END) Dow Jones Newswires

November 30, 2020 13:08 ET (18:08 GMT)

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