Transcription is one of the many areas where technology has impacted the future of work. First, global outsourcing sent transcription work to countries with language proficiency and low-cost wages. Now, deep-learning technologies such as AI and natural language processing are bringing automation to the industry. Verbit is an AI-powered transcription and captioning platform that leverages natural language processing and machine learning to deliver transcription that’s faster, more accurate, and less costly than previously possible. However, the platform isn’t completely dependent on technology as it operates a hybrid model with 30,000+ professional transcribers to review the accuracy of the transcriptions and captions as AI still can’t always correctly discern the reality of human dialogues in terms of context and common sense. Verbit is able to filter out background noises and detect domain-specific terminology, which is useful for compliance with industry-specific regulations. The depth of the technical stack also allows for captioning live audio and video in real-time. The company is just shy of a $100M ARR with ~70% margins.
AlleyWatch caught up with CEO and Founder Tom Livne to learn more about how his experience as an attorney working with transcription led him to found Verbit, the company’s path towards IPO, latest round of funding, and much, much more.
Who were your investors and how much did you raise?
Verbit has secured $157 million in Series D funding, giving the company a unicorn valuation of over $1 billion only four years after its inception.
This round was led by Sapphire Ventures, alongside new investors such as Third Point, More Capital, Omer Cygler, Azura, and ICON fund, as well as existing investors such as Stripes, Vertex Ventures and Vertex Growth, HV Capital, Oryzn Capital, Viola Ventures, and ClalTech.
Tell us about the product or service that Verbit offers.
Verbit is the world’s leading AI-powered transcription and captioning platform, providing accurate, word-for-word transcripts and captions to our customers in the education, legal, media, and enterprise sectors.
Our transcription and captioning platform leverages a unique hybrid model of AI – specifically machine learning and natural language processing – and a network of over 30,000 professional transcribers to achieve over 99% accuracy and a turnaround time that is ten times faster than the industry standard.
Verbit’s in-house AI technology detects domain-specific terms, filters out background noises, and echoes and transcribes speakers regardless of accent to generate detailed, professional transcripts and captions from both live and recorded video and audio.
The acoustic, linguistic and contextual data is thoroughly checked by our transcribers, who maintain quality assurance, ensure high accuracy, and guarantee rapid turnaround time by editing and reviewing the material and incorporating customer-supplied notes, guidelines, and more.
Verbit also offers Audio Description to help vision-impaired or low vision audiences and Audio-Visual Translation to serve the needs of international audiences as well as help content creators expand their reach.
What inspired the start of Verbit?
I started Verbit because I was frustrated with the low quality of transcriptions I received while working as a lawyer in my previous role. I spent a lot of time and money transcribing depositions and thought this could be done much better with the right technology. While I was looking to build a solution for the legal space specifically, I realized that this sector was just one of the many areas in which transcriptions were still being done manually – making processes inefficient, costly, and time-consuming. That’s when I saw the opportunity to enter the education, corporate, and most recently the media sector.
How is Verbit different?
What makes Verbit’s platform so unique is that it harnesses the power of both artificial and human intelligence to provide vertical-specific transcription and captioning solutions, tailoring its solution to each industry. This means Verbit’s customers in the legal, education, media, and enterprise sectors each have access to transcripts and captions that comply with their unique, industry-specific regulations and standards.
Another major differentiator is that Verbit’s model uses machine learning (ML) and natural language processing (NPL), as well as a network of over 30,000 hand-picked, professional transcribers to achieve over 99% accuracy with a turnaround time that is ten times faster than the industry standard.
What market does Verbit target and how big is it?
Overall, the transcription industry is a $30 billion market that has immense potential for innovative solutions like Verbit’s. The specific verticals we’re currently focused on and are the leading transcription platform in are legal, media, education, and enterprise.
What’s your business model?
Verbit operates with a usage-based SaaS model, with the key usage metric being audio minutes. We have a fixed price per audio minute transcribed, and customers are able to choose different options and plans and can for example pay for a fixed amount of minutes they want to transcribe over a specific time period. Depending on the vertical and unique business needs, customers can opt for a pay per page or pay per minute plan.
How has COVID-19 impacted the business?
Verbit continues to be well-positioned to handle the evolving needs of our customers and the changes presented by the pandemic. The majority of our university, media, and business customers moved to remote and distance learning, and we’ve been able to support them with this transition. Our dedicated team worked tirelessly to support the legal space as well with the move to remote proceedings and digital depositions. We’re listening to customers and developing our products to support hybrid models of learning and work across sectors. We’re aiming to support the new world of work. Our commitment to innovation and listening to the market has instilled confidence in our customers.
What was the funding process like?
It was a very positive experience and I always enjoy speaking with investors and hearing their insights and feedback. I was also happy to be able to travel to the U.S. to meet with investors there in person. We’ve received a lot of interest from various investors for this round and it’s been extremely motivating and encouraging as we continue on our path towards an IPO.
What are the biggest challenges that you faced while raising capital?
There haven’t been many challenges since Verbit had already shown strong and rapid growth over the last year and investors saw the immense potential in our solution and ability to modernize and lead the $30 billion transcription market.
What factors about your business led your investors to write the check?
With strong 6x year-over-year revenue growth and close to $100 million in annual recurring revenue, we continue to grow at a rapid pace and have proven that our solution has immense potential. We’re also very cash efficient and have a high customer retention rate of 163% which are important metrics of success for investors. Our gross margin is around a solid 70% as well. Those strong numbers combined with our unique solution that brings together both AI and human intelligence has led to a lot of interest from investors.
What are the milestones you plan to achieve in the next six months?
The new funding will help us hire 200 more people across all types of roles, continue to expand into new verticals, and add more languages to our platform. We’re also preparing to become a public company next year, which will be our next major milestone. We’ll be doubling down on our acquisition strategy as well and make strategic investments to continue our growth.
The new funding will help us hire 200 more people across all types of roles, continue to expand into new verticals, and add more languages to our platform. We’re also preparing to become a public company next year, which will be our next major milestone. We’ll be doubling down on our acquisition strategy as well and make strategic investments to continue our growth.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Apart from setting clearly defined goals, you have to surround yourself with a team of experts you can trust to help bring your vision to life.
Companies must also prioritize leading with passion and purpose. In order to truly connect with an issue, you must be dedicated to the cause. In my case, beyond being driven to grant access for all, I am motivated to continue creating transcriber jobs for third-world countries.
Where do you see the company going now over the near term?
As mentioned, we’ll be growing our team quickly and are hiring people across product roles, HR, sales, marketing, customer support, and R&D to continue to innovate and add more features and capabilities to our solution. We’ll also continue to prepare for the upcoming IPO.
What’s your favorite outdoor dining restaurant in NYC?
Nobu.
