DXwand, a startup based in Cairo and Dubai that utilizes conversational AI to help Middle Eastern businesses automate customer service and employee assistance, has secured $4 million in Series A funding. The investment was led by UAE-based Shorooq Partners and Cairo-based firm Algebra Ventures, with the Dubai Future District Fund, an existing investor, also contributing.
The funding will support DXwand in its expansion throughout the MENA region and hasten its research and development pursuits in generative AI, knowledge mining, and omnichannel conversational AI.
DXwand CEO Ahmed Mahmoud, who previously led the data and AI enterprise sales at Microsoft for the Gulf and Middle East regions, identified a gap in the market for AI technologies in the Middle East. He found that Silicon Valley solutions were not catering to Arabic or other regional languages. His attempt to build AI models for regional spoken dialects while at Microsoft proved challenging, leading him to leave the company and establish DXwand.
After participating in an accelerator in 2018, Mahmoud launched DXwand to offer small businesses a customer-focused chatbot designed for sales via social media platforms. Initially, the company secured $150,000 in seed funding from angel investors in Qatar and Egypt. However, the team soon recognized the need to transition business models to achieve product-market fit and profitability.
The Microsoft alum said in the interview;
Our primary focus was building an AI solution that works for Arabic dialects, which are very complex and sophisticated — even Egypt had more than seven or eight spoken dialects. And that helped us to work well in this region, for the areas we support. Yet, this value by itself gets more sophistication wherever we go to more clients because those businesses require not just to have something to understand the language, but they also wanted something easier to onboard, and at that time, the natural language understanding solutions required a lot of efforts in labeling the data and working on labeling such data is a huge set of time and efforts that required businesses for us to do.
In 2021, the Egypt-based AI startup DXwand shifted its target from small businesses to larger corporations, focusing on the domains of knowledge mining and retrieval augmented generation (RAG). At the time, there was not a widespread interest in large language models as there is now. DXwand aimed to build a knowledge graph that eliminated manual data labeling, making onboarding of new clients faster and supporting more complex use cases, hence facilitating enterprise adoption.
An example scenario could be an enterprise with a vast array of policy and data documents. The challenge arises when they try to automate customer service or sales across digital channels, a task that normally involves manually labeling all data. This is often unrealistic due to the sheer scale of the task. DXwand’s knowledge mining capabilities come to the rescue by automating the labeling process. Enterprises input their raw data, and DXwand creates a pre-labeled data set, streamlining the process of implementing conversational interfaces for customers or staff.
Simply put, DXwand’s AI-powered software automates text and voice engagements between businesses, their customers, employees, and public-facing government services. It operates across a variety of platforms, such as call centers, Facebook Messenger, WhatsApp, SMS, and websites. It claims to understand slang in both Arabic and English, extracting valuable insights from conversations and presenting them on dashboards to help businesses make informed decisions. DXwand provides analytical tools and dashboards that offer insights into these conversations, transforming them into leads and sales, and enhancing customer retention and acquisition.
To expand this model in the Middle East and Gulf regions, DXwand secured additional investment between 2021 and 2022. It received $1.3 million in seed funding from SOSV and other investors, and a $1 million pre-Series A injection from the Dubai Future District Fund. This period of investment coincided with increasing interest and development in large language models. As these technologies matured, DXwand AI capitalized on the opportunity to expand its offerings to meet the growing demand for such solutions among its clients.
“We used those funds to support and accelerate our investments in knowledge mining, getting and leveraging specific solutions for specifically Arabic and other dialects. But also building on top of that knowledge mining to make it work for any language and expand the company into other areas like in Africa and Europe,” Mahmoud, who runs the startup alongside co-founder Mahmoud Gomaa, remarked. “Today, we have some clients from Africa. So we started to leverage that because it’s language agnostic, helps clients to onboard easily and solve their problems.”
DXwand’s CEO highlighted that the chatbot platform serves over 40 clients across various sectors in the MENA region, including healthcare, e-commerce, fintech, telecom, government, and legal. Since DXwand’s inception, the AI startup has facilitated over 5 million conversations and currently operates profitably, according to Mahmoud. The company charges annual subscriptions ranging from $50,000 to $400,000 based on usage volumes. In 2023, DXwand recorded over $5 million in annual recurring revenues, representing a 2x year-over-year growth, which demonstrates the platform’s growing relevance and adoption in a market with a limited number of AI platforms.
With the newly acquired investment, DXwand plans to expand across Africa and Saudi Arabia, both of which hold strategic significance for the startup, according to Mahmoud in a call. He further stated that the startup aims to accelerate its research endeavours, particularly in the areas of knowledge mining and retrieval augmented generation. Establishing partnerships within the communities it serves, through alliances with technology providers such as telecom operators, is also a top priority for the startup.
