DXwanda Cairo and Dubai-based startup leveraging conversational AI to help businesses in the Middle East automate customer service and employee assistance has raised $4 million in Series A funding.
UAE-based Shorooq Partners and Cairo-based Algebra Ventures led the investment, with existing investor Dubai Future District Fund also participating. The Series A investment will help DXwand further expand into the MENA region and accelerate research and development efforts in genetic AI, knowledge mining and multi-channel conversational AI in the region.
Before founding DXwand, CEO Ahmed Mahmoud worked at Microsoft, where he led sales of the data and artificial intelligence businesses in the Gulf region and the Middle East. His career journey started with an engineering background and working in software and AI technology in development teams. Moving to the business side of the industry, Mahmoud worked at Vodafone and then Microsoft. In these roles, he engaged with clients to explore ways in which artificial intelligence could improve productivity and the overall user experience.
At Microsoft, he spotted something obvious: Conversational AI and broader AI technologies had not fully matured and developed in the Middle East, as solutions from Silicon Valley did not cover Arabic or other languages in the region. “At the time, I tried to validate whether we could build AI models for spoken dialects in the region, but we ran into some challenges. Realizing a business opportunity prompted me to leave Microsoft and found DXwand to address this gap.”
After going through an accelerator in 2018, Mahmoud started DXwand to provide small businesses with a customer-centric chatbot tailored for selling through social media platforms. The company initially secured $150,000 in angel funding in Qatar and Egypt. However, the team soon realized that they needed to change business models to find product-market fit and become profitable.
“Our main focus was to create an AI solution that works for Arabic dialects, which are very complex and complicated – even Egypt had more than seven or eight spoken dialects. And that’s helped us work well in that area, for the areas we support,” the Microsoft legend said in the interview. “However, that value itself is becoming more refined wherever we go to more customers, because these businesses are not just demanding to have something to understand the language, but they also wanted something easier to integrate, and at the time, natural language understanding solutions are required The many efforts to label data and the work to label such data is a huge amount of time and effort that businesses have required us to do.”
In 2021, the Egyptian-born AI startup began a shift, targeting corporations and enterprises instead of small businesses, as it directs its efforts towards the knowledge mining and recovery augmented production (RAG) sectors. Back then, the buzz around big language models hadn’t yet taken off like it has now – and DXwand aimed to create a knowledge graph that eliminated the need for customers to manually label data. This approach allows it to pre-label data, facilitating faster onboarding of more customers and supporting complex use cases, ultimately helping businesses adopt.
Consider a scenario where a business 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 through their digital channels — a task that usually involves manually tagging all that data. Realistically, achieving this is no easy feat. many may find it impractical. This is where knowledge mining comes into play. With this feature, such businesses can import their raw data — and DXwand’s system takes care of the labeling by creating a pre-tagged set and optimizing their processes to implement conversational experiences for their customers or staff without the hard work of manual data labeling.
In a nutshell, DXwand’s AI-powered software automates text and voice conversations between businesses, their customers, their employees and citizen-facing government agencies. This feature spans multiple platforms including call centers, Facebook Messenger, WhatsApp, SMS and websites. The platform claims to understand slang in both Arabic and English, extracting valuable insights from conversations and presenting them in dashboards for businesses to make informed decisions. According to the startup, it provides analytical tools and dashboards that offer insight into these conversations and convert them into leads and sales, boosting customer retention and acquisition.
To scale this model in the Middle East and Gulf regions, the startup made additional investments between 2021 and 2022: $1.3 million in seed expansion from SOSV and other investors and $1 million in pre-series A from Dubai Future District Fund. This period coincided with the wave of interest and maturity of large language models. As these technologies became more powerful, DXwand AI seized the opportunity to expand its offerings and meet the growing demand for such solutions among its customers.
“We used these funds to support and accelerate our investments in knowledge mining, obtaining and leveraging specific solutions for specific Arabic and other dialects. But also to build on top of this knowledge mining to make it work for any language and expand the company to other regions like Africa and Europe,” Mahmoud, who runs the startup with co-founder Mahmoud Gomaa, he observed. “Today, we have some customers from Africa. So we started taking advantage of it because it’s language agnostic, it helps customers get on board easily and solve their problems.”
The CEO highlighted that the chatbot platform serves more than 40 customers across the MENA region, spanning various sectors such as healthcare, e-commerce, fintech, telecommunications, government and legal. Since its inception, the AI startup has facilitated over 5 million conversations and is currently a profitable entity, Mahmoud added. Depending on usage volume, customers are charged annual subscriptions of between $50,000 and $400,000. In addition, Mahmoud revealed that the company recorded over $5 million in annual recurring revenue in 2023, representing 2x year-over-year growth and highlighting the growing importance and adoption of the platform in a market where AI platforms are few.
Armed with this new investment, DXwand’s next plans include expansion across Africa and Saudi Arabia, Mahmoud said on the call, adding that both regions are of particular importance to the startup’s strategy. He also notes that accelerating research efforts, especially in knowledge mining and augmented production recovery, and forming alliances with technology providers such as telecommunications providers to create meaningful partnerships within the communities it serves, also remains a focus of the startup.
