Facebook Acquires Kustomer for $1B to Strengthen Customer Services

Facebook announced on Monday that it has planned to acquire Kustomer, a customer relationship management start-up, to help it build its e-Commerce business. The deal values Kustomer at close to $1 billion, said two people with knowledge of the talks. Kustomer, which is based in New York, had raised roughly $170 million in venture funding, according to data compiled by Crunchbase.

CRM tools help clients manage their communications with customers via phone, email, text or direct messages in specific apps, such as WhatsApp or Messenger. The acquisition of a business-software company such as Kustomer is unusual for Facebook. In the past, Facebook has primarily bought consumer-centric companies, such as gif Catalog Company Giphy in May and Spanish cloud video gaming company PlayGiga in December 2019. These acquisitions usually serve as the foundation for building features for Facebook users.

By bringing Kustomer into the fold, Facebook will be providing small businesses that use its service to advertise and sell goods more features to close sales through the social network’s services. This should seemingly lead these businesses to spend more on Facebook advertisements. That’s key for the company, which makes nearly 99 percent of its revenue from advertising. “Facebook eventually expects to host Kustomer data on secure Facebook infrastructure,” said Dan Levy, VP of Ads and Business Products. In doing so, Facebook will act as a service provider at the instruction of business customers.

While Facebook will not automatically use Kustomer data to inform the ads that a user sees, businesses will have the option to use their data at Kustomer for their own marketing purposes, which may include separate advertising services on Facebook.

“Our goal with Kustomer is simple: to give businesses access to best-in-class tools that deliver excellent service and support,” said Matt Idema, COO, WhatsApp.

Kustomer is based in New York and was founded in 2015. The company has raised approximately $173.5 million, according to Crunchbase. JPMorgan served as the sole advisor to Kustomer in the deal.