DXwanda Cairo and Dubai-based startup that leverages conversational AI to help businesses in the Middle East automate customer service and employee assistance, has raised $4 million in its Series A funding round.
UAE-based Shorouk Partners and Cairo-based Algebra Ventures led the investment, and Dubai Future District Fund, the existing investor, also participated. The Series A investment will help DXwand expand further into the MENA region and accelerate R&D efforts in generative AI, knowledge mining, and omni-channel conversational AI within the region.
Before founding DXwand, he was the CEO Ahmed Mahmoud He worked at Microsoft, where he led sales of data and artificial intelligence companies in the Gulf region and the Middle East. His professional journey began with an engineering background and worked on software and artificial intelligence technology within development teams. Moving to the business side of the industry, Mahmoud worked at Vodafone and then Microsoft. In these roles, he engages with customers to explore ways in which AI can improve productivity and the overall user experience.
At Microsoft, he identified something clear: Conversational AI and broader AI technologies were not fully mature and cutting-edge in the Middle East, because the solutions provided by Silicon Valley did not meet the needs of Arabic or other languages in the region. “At the time, I tried to investigate whether we could build AI models of dialects spoken in the region, but we faced some challenges. Realizing the business opportunity prompted me to resign from Microsoft and found DXwand to address this gap.
After passing through the accelerator program in 2018, Mahmoud launched DXwand to provide small businesses with a customer-focused chatbot specifically designed for social sales. The company initially secured $150,000 in seed funding from angel investors in Qatar and Egypt. However, the team soon realized that they needed to switch business models to find product-market fit and make a profit.
“Our primary focus was to build an AI solution that fits Arabic dialects, which are very complex and sophisticated – even Egypt has more than seven or eight spoken dialects. This has helped us work well in this region, in the areas we support.” However, This value in itself becomes more complex as we go to more customers because these companies not only required that they have something to understand language, but they also wanted something that was easier to understand, and at that time, natural language understanding solutions were required if a lot of effort was made. The effort in classifying data and working to classify this data represents a significant amount of time and effort that companies have asked us to do.
In 2021, the Egypt-based AI startup embarked on a pivot, targeting enterprises and enterprises rather than small businesses as it directed its efforts towards the areas of knowledge extraction and retrieval (RAG). At the time, the hype around large language models had not yet taken off as much as it does now – and DXwand aimed to create a knowledge graph that eliminated the need for customers to manually label data. This approach allows them to pre-tag data, making it easier to onboard more customers faster and support evolving use cases, ultimately helping organizations adopt.
Consider a scenario in which an organization deals with a huge repository of policies and data, enough to fill a room with PDF files. The challenge arises when they aim to automate customer service or sales across their digital channels – a task that typically involves manually sorting through all that data. Realistically, achieving this goal is not easy; Many may find it impractical. Here comes the role of knowledge extraction. With this capability, such organizations can input their raw data – DXwand takes care of the categorization by creating a pre-categorized set and streamlines their processes to implement conversational experiences for their customers or employees without the tedious task of manually categorizing the data.
In short, DXwand’s AI-powered software automates text and voice conversations between businesses, their customers, employees, and citizen-facing government services. This functionality extends to different platforms, including call centers, Facebook Messenger, WhatsApp, SMS, and websites. The platform claims to understand slang in Arabic and English, extract valuable insights from conversations and present them on dashboards for businesses to make informed decisions. According to the startup, it provides analytics tools and dashboards that provide insights into these conversations and turn them into leads and sales, boosting customer retention and acquisition.
To scale this model in the Middle East and Gulf region, the startup secured additional investments between 2021 and 2022: US$1.3 million in a seed rollover from SOSV and other investors and US$1 million in pre-Series A from the Dubai Future Region Fund. This period coincided with increased interest and maturation of large linguistic models. As these technologies become more powerful, DXwand AI has seized the opportunity to expand its offerings and meet the growing demand for such solutions among its customers.
“We have used these funds to support and accelerate our investments in knowledge mining, acquiring and leveraging specific solutions for Arabic and other dialects specifically. But also relying on knowledge mining to make it suitable for any language and expanding the company to other regions such as Africa and Europe,” says Mahmoud. Who runs the startup alongside the co-founder. Mahmoud GomaaHe pointed out. “Today, we have some customers from Africa. So we started leveraging that because it is language-agnostic, and helps customers join easily and solve their problems.
The CEO confirmed that the chatbot platform meets the needs of more than 40 customers throughout the Middle East and North Africa region, and covers various sectors such as healthcare, e-commerce, financial technology, communications, government and legal affairs. Mahmoud added that since its inception, the AI startup has facilitated more than 5 million conversations and is currently a profitable entity. Depending on the volume of usage, customers are charged annual subscriptions of between $50,000 and $400,000. Furthermore, Mahmoud revealed that the company recorded annual recurring revenues of over $5 million in 2023, which represents 2X growth year-on-year and underscores the platform’s growing importance and adoption in a market where AI platforms are few and far between.
Armed with this new investment, DXwand’s subsequent plans include expansion across Africa and Saudi Arabia, Mahmoud shared on the call, adding that both regions are of particular importance to the startup’s strategy. He also notes that accelerating research efforts, particularly in the area of knowledge extraction and retrieval, and forming alliances with technology providers such as telecom operators to forge meaningful partnerships within the communities they serve, remain top of mind for startups as well.