How 2 UC Berkeley dropouts raised $28 million for their AI marketing automation startup

AI-powered marketing automation startup Conversion, founded five years ago by two UC Berkeley dropouts, has raised a $28 million Series A led by Abstract, with participation from True Ventures and HOF Capital.

The company’s founding story sounds like it could have been an episode of the HBO show “Silicon Valley.”

The story begins all the way back when co-founder and CEO Neil Tewari, now 24, was in high school. He got busted one day watching a TechCrunch Disrupt livestream during class, was sent to the principal’s office and had to stay late.

Afraid to call his parents and tell them why they had to pick him up, he instead called one of their close friends. On the drive home, Tewari explained to the friend what got him in trouble. “I told him I had this interest [in entrepreneurship], and four years later, he was actually the first person to write us a check into the company,” Tewari told TechCrunch.

James Jiao, Tewari’s college roommate at Berkeley — now Conversion’s co-founder and CTO — also dreamed of founding his own company, so the two tried building various products, like one for helping marketeers buy product placement ads. They stumbled on the idea for Conversion when they signed up for HubSpot to help them with marketing tasks and decided to build a few extra automation features to layer on top of it.

“It was originally for us,” Tewari said of his startup’s tech. The co-founders enjoyed building their internal marketing tool so much, they wondered if they could sell it and began reaching out to marketing executives for “customer discovery” interviews.

“We actually spent like two months doing like 160 customer interviews with VPs of marketing, 50- to 500-employee businesses, and got a much more positive response than we could have imagined,” Tewari said. 

Marketing teams had these tools deeply embedded in their workflows, but everyone had similar complaints about the parts they couldn’t automate.

The duo had found their idea. The family friend introduced them to more marketing execs, which helped them raise a $2 million seed round. At age 19, they dropped out of college to work full time on Conversion.

The founders treated their raised funds so frugally, they lived in a two-bed, one-bath apartment with five other roommates: two people to a room, with people sleeping on the couches and in the closet. 

As they built their product, ChatGPT burst onto the scene. Many legacy marketing automation tools are adding various AI and chat integrations into their wares, but not all of their features support these integrations. Marketing teams wanted “to be able to enrich contacts, [be] able to automate workflows,” for instance, Tewari said. Conversion has baked AI in, which means it can do things like organize leads and automate personalized follow-up emails.

As AI interest has soared, so has the company’s prospects. Conversion is nearing $10 million ARR over the past two years, Tewari said, and about 90% of its customers are midsize businesses that have yanked out a legacy app.

Of course, Conversion is also in a crowded field. Besides the legacy marketing automation tools like HubSpot, Adobe Marketo, or Salesforce Pardot, there are other AI native startups like Jasper, Writer AI, Iterable, Copy.ai, and many others.

But Tewari also has the classic Silicon Valley confidence of a founder in a crowded market. His game plan calls for targeting businesses that use the older marketing tools. Conversion is not, for instance, targeting startups choosing a tool for the first time.

The company has raised a total of $30 million between its seed and Series A, the CEO says, and is doing well enough that the founders have each moved into separate apartments where they have their own rooms, and none of their roommates sleep in a closet.